Junaid Iqbal Memon Discusses On Dubai’s Property Market

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Experienced in real estate and property development Junaid Iqbal Memon owns and also manages a number of properties and businesses in Dubai, the UK, and India. He has a number of residential projects that have been completed with him at the helm. In today’s post, we will be talking about Dubai's real estate market and why it is getting set for the "ready" wave affecting the city's private leases and even on how developers price their off-plan launches.

5% down
At Al Furjan, for example, Nakheel is putting a flat 5 percent down payment which enables the owner to move in quickly. So, no waiting around to take possession.

Also, whatever is left of the installments can be made more than five years for the townhouses and seven on the estate villas. Nakheel has handed over 1,130 units out of 1,234 in total at Al Furjan.

In Jumeirah Village Circle, private developers are arranging 5-10 percent down payment plans and the rest to be paid in five years. Ditto at the Sports City. Reports in Sports City and JVC are somewhere near 10-15 percent on average since mid-2017. A three-room unit at both locations are in the scope of Dh90,000-Dh100,000 per year. Each new property that gets added to these spots holds rental requests in check.

Now, what does this mean for the wider property market dynamics? Ready property purchases tend to be dominated by the end-clients, and who are then likely to move into their own homes as opposed to lease it out. This is exactly what is happening in these emerging residential areas of the city, and, to an extent, even in Business Bay.

Pressure
Also, that includes the pressures on the rest of the rental marketplace. Leases in Sports City and JVC are somewhere near 10-15 percent on average since mid-2017. A three- bedroom unit at both locations are in the scope of Dh90,000-Dh100,000 every year. Each new property that gets added to these spots holds rental requests in line.

“Rents are falling across the board and that is due to a number of reasons, one of them being the fact there are now generous incentives given on ready properties,” said Sameer Lakhani, Managing Director at Global Capital Partners.

Nakheel is offering a flat 5 percent downpayment at Al Furjan. This enables the owner to move in quickly And the rest of the payments can be made over five years for the townhouses and seven on the villas. Nakheel has to date handed over 1,130 units out of 1,234 in total at Al Furjan.

"That has the effect of specific networks falling more than others in rents. Yet, these are the networks that end-clients observe to be substituted.

End-users
“Clearly, this is a trend that will accelerate for all kinds of reasons.” That could also prompt more residents to make the switch to buying for their own use rather than remain as tenants. End-users — that’s what this market needs to see a lot more of, as Dubai’s developers and the authorities know only too well. As per Cluttons, the consultancy, this sentiment seems to be percolating down. Properties valued at Dh1.5 million and with mortgages on them are turning into a customary component in exchanges, close by the multi-million dirham luxury homes Dubai is known for.

"At this value point (of Dh1.5 million), one-and two-room flats in a setup territory are overwhelming the vast majority of the movement in the market," said Richard Paul, Head of Professional Services for Cluttons M. E., in an ongoing explanation. "This is additionally the situation for planned proprietor occupiers who wish to stop paying rent.

"On the off chance that they have satisfactory value, it bodes well for them to mull over satisfying their very own home loan and take a gander at land as a mid-and long haul venture."

Tougher competition
Developers with off-plan projects also need to watch the ready space. Because whatever incentive they can come up with, it can prove difficult to compete with someone offering a modest downpayment scheme on a ready-to-move-into home. And it’s actually happening. “In areas where smaller developers are present in large numbers, they are offering discounts on off-plan in excess of 20 percent over the prevailing value,” said Lakhani.

“These include areas such as JVC, Sports City and Dubai Residential Complex in the mid-income space, and even at some of the Meydan projects and Dubai Hills in the upper-income space.” The market is cooling off on off-plan incentives

Five years? Ten?
A year ago's off-plan sales sizzle was based on extended post-handover plans. Take possession and pay the rest over five to 10 years, that was how developers were catching the buyer’s eye. But the charm seems to be wearing off on such schemes. “Among the smaller developers, in particular, there has reached a point whereby off-plan incentives simply are not feasible anymore,” said Sameer Lakhani at Global Capital Partners.

“It is here that we are seeing lower prices being offered in lieu of extended payment plans so that it attracts the price-conscious buyer.”

Junaid Iqbal Memon is property development expert. Our services are aimed at professionals in the property development industry. You can learn more by reading about Junaid Iqbal Memon online. Read about our founder on the Junaid Iqbal Memon profile page. You can also follow the Junaid Iqbal Memon on Facebook.

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3 comments

  1. This is a very, very insightful piece Junaid thank you for this!

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  2. Amazing content Mr. Junaid Iqbal Memon.Thank you for sharing!

    ReplyDelete