Dubai developers' record high prices and aggressive off-plan payment plans are forcing buyers out of central districts, compelling them to seek properties in the outskirts. As prices peak in the city's hot spots, affordable and economical areas are experiencing significant price surges as buyers and investors shift their focus to these regions.
Property prices in prime locations like Downtown, Business Bay, Palm Jumeirah, Marina, Sheikh Zayed Road, and Dubai Hills Estate have been growing at single to double-digit rates quarterly during the Covid-19 pandemic, driven by high demand from millionaires and high net worth individuals relocating to the emirate. Additionally, international investors are purchasing off-plan properties, which are more economical compared to other global cities such as London, New York, Hong Kong, Paris, and Singapore.
Prathyusha Gurrapu, head of research and consultancy at Cushman & Wakefield Core, noted that citywide sales prices continued their upward trend for the 17th consecutive quarter in Q3 2024, recording a robust 20 per cent year-on-year increase. Villa prices surged 23 per cent year-on-year, while apartment rates grew 19 per cent in the third quarter of this year. Cushman & Wakefield Core data indicated that suburban and affordable communities are leading the market.
"This surge is largely driven by relatively lower price points in these areas and the substantial price growth in central districts, pushing more buyers to invest in suburban regions. Discovery Gardens recorded the highest price increase at 43 per cent, followed by Jumeirah Lakes Towers and Dubailand (Remraam) at 34 per cent and 28 per cent, respectively. Meanwhile, City Walk and Dubai Hills Estate both registered moderate increases of 12 per cent," said Gurrapu, adding that "This shift highlights the growing demand for value-driven investment opportunities in suburban areas, as buyers are being priced out of the central districts and seek alternatives in outer, suburban locations."
Furthermore, some Dubai developers have become aggressive in their payment plans as off-plan property demand continues to grow consistently. These payment plans ensure timely delivery and completion of projects, despite rising construction material costs and challenges in securing good contractors. "The sustained high demand for off-plan properties prompted some developers to introduce aggressive payment plans, with structures reaching as high as 80/20 or 75/25. This trend is making homeownership through off-plan purchases more challenging for lower-income individuals and families, especially those looking for larger apartments or villas," said Asteco, a Dubai-based real estate services firm.
Off-plan transactional activity remained robust in the third quarter, with developments in desirable locations and from prominent developers often selling out within days or even hours. This strong performance is driven by a synergy of key factors such as brand reputation, desirable location, quality product offerings, competitive pricing, and attractive payment plans.
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