Off-plan units have big share of deals
Off-plan units still command a lion's share of property transactions in Dubai despite slowdown in new project launches because there is a significant amount of off-plan projects with available units in the market, says industry analysts.
Due to decline in property sales, developers are also expected to sell ready, finished units in the secondary market as upcoming supply will continue to put pressure on local property market, said Lynnette Abad, director of research and data at Property Finder.
Around 1,824 transactions worth over Dh3.62 billion were conducted in April 2020, taking the year-to-date total to 12,254 sales transactions worth Dh24.15 billion. Off-plan accounted for 72 per cent of all transactions and was dominated by Villanova and Dubai Creek Harbour for villa/townhouses and apartments, respectively.
"There is a significant amount of off-plan projects with available units, even projects which are currently under construction or almost completed. While many units are being completed this year, we will likely see developers selling ready, finished units in the secondary market. Upcoming supply will continue to put pressure on sales and rental prices, especially in the areas where you have like for like properties," said Abad.
Dubai's property developers - especially those backed by the government - have pulled back from project launches in order to curtail supply of new units. A high level committee has been set up to bring stability in supply and demand in the local property market.
Due to oversupply, prices and rentals have been consistently declining over the last few years. Property Finder data showed top, off-plan sales locations were The Lagoons in Dubai Creek Harbour (123 transactions), Jumeirah Village Circle (112), Villanova (110), Umm Suqeim (105) and Business Bay (97). The volume of transactions for the secondary market were considerably lower than the off-plan market, however, Dubai Marina (40) and Palm Jumeirah (39) dominated as always. These were followed by Mudon (31), Downtown Dubai (26) and Dubai Hills Estate (21).
According to ValuStrat, Q1 2020 saw cash sales of ready homes sales grew 30.4 percent annually with no change quarterly.
Despite the COVID-19 challenges which began to impact during the second half of March, this was considered as the best first quarter for ready home cash sales since 2014. It said off-plan home sales grew 18.2 per cent annually, however, there was a considerable drop of 26.3 per cent when compared to Q4 last year, mainly due to developers limiting new project launches during the quarter due to oversupply concerns, as well as discontinuing further sales since lock-down measures were put in place.