Real estate prices plummet at world’s tallest tower; Armani Residences cling to premium
Armani-branded residences in the Burj Khalifa are comparatively holding their sale value, despite other apartments in the world’s tallest tower seeing price declines of more than 70 percent, real estate brokers have said.
Average sale prices for the tower’s 144 luxury Armani Residences are valued at AED4-5,000 per square foot; at their minimum, almost double the AED2,800 per sq ft commanded by the remainder of the skyscraper’s 900 apartments, said Catherine Clarke, head of residential valuations at real estate consultancy firm Colliers International.
At the peak of the Dubai property boom, apartments in the tower were valued at around AED11,000 per sq ft. By March 2009, this had dropped to around AED2,500 per sq ft.
During the handover period earlier this year, prices rose again slightly to around AED3,500 per sq ft, Clarke said, but prices had now settled at around AED2,800 per sq ft.
Emaar, the developer behind the world’s tallest tower, claimed 90 percent of the 900 luxury apartments had been sold before the Burj Khalifa’s glittering launch in January.
Clarke said she believed the decline in prices could be chalked up to savvier negotiating by buyers, rather than distressed sales.
“There are people with money in the high-end. They are not necessarily distressed sales but what [buyers] are doing is negotiating very well and they are bringing down the prices,” she said.
The Armani-branded apartments were faring better partly because of the inclusion of Armani designed furnishings, she said: many of the unbranded flats are unfurnished.
Earlier this month, Bloomberg reported that rental rates at the Burj Khalifa had plummeted by nearly 40 percent and that about 825 of the tower’s 900 apartments remained vacant.
Dubai real estate agents told Arabian Business that a standoff has developed between owners and buyers over what is viewed as unrealistic price expectations.
“We have not seen much of movement in the high end for a while. A lot of the owners can hold on, but the values are still too high at that end,” said Iseeb Rehman, managing director, Sherwoods Real Estate.
Rehman estimated that the number of sales in the high end sector had slumped by around 40 percent in the last year.
“Transactions will start to happen once people can see the real values in line with the current market,” he said.
Speaking earlier this month at a Dubai real estate show, Muhammad Waseem Silat, chief operating officer, 3G Real Estate, said owners were still not prepared to suffer a loss in order to sell their property.
“They have a certain limit to go down to… They are not willing to go below cost price,” Silat said.