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Dubai in 2017 – How the Property Market Has Fared

Dubai has long been a popular destination for British overseas property investors, so how has the property market fared in Dubai in 2017.

Dubai in 2017 witnessed an upsurge in both ready and off-plan sales this year, with overall property transactions until September totalling more than 50,000, according to the Dubai Land Department (DLD).

Heightened off-plan sales, lower priced inventory, efficient unit sizes and yield compression are the key factors that summarise the real estate market in Dubai in 2017.

Off-Plan Sales

Properties sold off-plan have continued to dominate the market in Dubai in 2017, accounting for 68 per cent of the total property transactions up until the end of September, with over 80 per cent being apartment sales.

During the first half of quarter 4 (October 1 to November 15), off-plan transactions in apartments and villas/townhouses stand at 2,515 and 235 respectively.

Serena, Mohammed bin Rashid City (MBR), Al Furjan and Dubai Healthcare City were the top four destinations for off-plan property transactions.

Lower Priced Properties

Dubai in 2017 has seen residential property transaction prices within a close range of Dh1.25 million to Dh1.5 million for apartments and Dh1.7 million to Dh2.1 million for villas/townhouses on average.

However, many more recent off-plan transactions in October have been for studios, one-bedroom and two-bedroom apartments, with the prices for these averaging at Dh600,000, Dh940,000 and Dh1.6million, respectively.

Some studios in areas such as Dubai South and Downtown Jebel Ali are selling for less than Dh500,000 and in International City, a two-bedroom apartment can be found for Dh719,000, both below the market average.

Lower priced properties continue to become available in many locations, making buying a property in Dubai much more affordable.

Property Offers

Many developers in Dubai in 2017 have been offering more efficient unit sizes to keep prices attractive, along with offering incentives, such as DLD fee waivers and aggressive payment plans.

Most of the new payment plans are structured with post-handover payments, such as 40/60, 25/75 schedules where the buyer pays a lower amount upfront, and only pays the larger amount upon completion.

Sales of smaller residential units have become popular in 2017, with over 60 per cent of the off-plan apartment transactions at the Al Furjan development in October occurring for unit sizes less than 500 square feet.

Smaller villas are also selling well, with off-plan transactions at the Serena development showing a 10 per cent drop in plots measuring over 2,500 square feet, but a 20 per cent increase in sales of plot areas with sizes between 2,000 square feet and 2,500 square feet.

Rental Yields

There is no getting away from the fact that rental yields have fallen in Dubai in 2017. However, the level of decline does vary depending on where properties are situated.

According to the Property Monitor Index, the 12-month change in prices for key communities in Dubai registered marginal declines of 1.45 per cent for apartments and 1.29 per cent for villas/townhouses as of September.

Prices in established communities with limited upcoming supply have held stronger than emerging locations even as marginal price declines continued in the third quarter.

The greater decline in rents rather than in prices has created yield compression in the market and this is expected to continue heading into 2018.

Overall, the property market in Dubai in 2017 has seen property prices steady, though rental yields have shown some decline. However, in the lead up to Expo 2020 many experts are expecting the whole market to turn around.

Overseas property investors should always do their homework when looking to invest in any destination.

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