Dubai has been registering a boost in property sales transactions in the latest six months.
Secondary, ready villas and townhouses are in huge demand stated by Dubai Land Department. But it is not the ‘glut’ in the market that causes the boost.
The prices, too, are recording an increase in trend for the last six months. The upward movement in the mid-to-high housing market shows a paradigm shift in the mindset brought about by the setback of the pandemic, say experts.
Babar Ali, Sales Director, Homesmith Estate Brokers says, “Yes, people are buying and are leaning towards townhouses and villas. They want to own a private space that allows less interaction with other people”.
Shiv Gupta, co-founder, mymoneysouq.com, echoes similar sentiments. “The novel coronavirus disease (Covid-19) pandemic forced digitization on us. It imposed a change where our homes are no longer just a sanctuary for relaxation but double up as office space, too. So, people are looking for bigger spaces, even if they are a little far off from work or city centers. They don’t mind longer commutes to work, which in most cases have been reduced to once or twice a week or less, for a space that is more comfortable.”
And when families and individuals find bigger adobes, the interest every time has been more in communities. “Gated communities have been of much interest in Dubai in the last six-eight months. This applies to both rentals and sales. More and more families are appreciating the lifestyle that they can afford in a community with parks, walkways, organized commercial spaces like malls, etc., in community living as opposed to living in a standalone building,” says Farooq Syed, chief executive officer (CEO), Springfield Properties.
Springfield Properties have seen a record of people moving from Barsha, Dubai Sports City, and Jumeirah Village Circle (JVC) to communities such as Town Square, Mudon, Dubai Hills. “Prime real estate is selling at a premium right now, and in this sector, villas and townhouses have done phenomenally well,” adds Syed.
Besides the exclusivity, there are certain aspects of the economics of homeownership that also work in the favour of villas and townhouses.
Rather than the exclusivity, there are few aspects of the economics of homeownership that also accelerated in the favour of villas and townhouses.
Service charges, for instance, which are paid by owners on a yearly basis are much more affordable in villas and townhouses. “Villa owners, in most communities, usually a fifth of what owners of an apartment would pay. The service charge for a three-bedroom house villa in Springs is around Dh6,500. Comparatively, a three-bedroom in Marina attracts a service charge of Dh20,000-Dh25,000,” says Ali.
Prices have Bottomed Out
Prices have lowered down, at least in the mid-to-high and also luxurious sectors.
Less down payments, a fall in interest rates, revised loan to value ratio, and Dubai’s image of a better haven for investments are mainly the reasons for the rise in demand and prices in this field.
“Uber luxurious properties have seen a spike in demand, thanks to European buyers. Since the opening of Dubai in July, we’ve seen quite a few high net-worth transactions,” says Syed.
Quality main real estate is not available in a wide range anymore. Constructions over 15 years old begin to show signs of aging. Now, buyers are ready to pay a premium for the latest ones. The cost for a house in Shoreline apartments on Palm Jumeriah, for instance, begins at Dh1,100 to 1,200 per square feet.
In comparison, the prices on an average at Dh4,000 per square feet at the Royal Atlantis, which is also at Palm Jumeriah. Syed says,“People are willing to pay top dollar for good quality development in the same area”.
Similar changes are also seen in the JBR neighborhood, where previous apartments are selling at Dh1,000 per square feet, and apartments at One JBR, a new construction, are being sold at a minimum of Dh4,000 square feet.
Should You Buy?
As of now, this rise in the prices and demands are only seen in high-end properties. It is also predicted to have a pull effect on other low-to-mid segments too this year. Rents and the sale prices will more likely rise across the board by the end of this year, said, experts.
At present, while we are reading this, there would be an ongoing debate among expatriates on either to buy a house or to rent it. One way to find out this is by finding and calculating how long you are planning to stay in this country. “If you can pay the same rent amount for 10 to 15 years then the house is yours. You have to do the math,” says Gupta.
But the question arises is this a good time to buy? Well, this would depend mainly on your financial health rather than the prices dictated by the realty sector right now. “Invest what you can spare. The whole economic environment is a bit volatile even now. We expect it to be better in six months, but this is not a time to be aggressive. If you have a buffer, an emergency fund that will protect you from any untoward experience, then buy,” advises Gupta.
