Dubai villa owners risk pricing homes out of market

Villa owners in Dubai are failing to match their asking prices to market realities, according to a survey of real estate brokers in the emirate, leading to fewer enquiries translating into sales.

Real estate website propertyfinder.ae saw a two percent rise in online searches for villa for sale but saw a 13 percent drop in the number that converted into a viewing with a broker.

Agents polled by the website said the decline reflected a jump in villa prices in the city’s more established developments, following signs of a fledgling recovery in Dubai’s property market.

“Villas have been very active in the last year and the pricing in The Springs, Meadows, and many other mature communities has increased,” said Noman Mehmood, senior sales associate at Dubai-based TAKtical Realty Group.

“In the last quarter, because there was a lot of interest from potential buyers and genuine transactions happening... we had a lot of sellers who priced themselves out of the market.”

Villas in Arabian Ranches dropped from the fourth most popular search for buyers in the third quarter to sixth in the fourth quarter while searches for Jumeirah Lake Towers and Jumeirah Beach Residence increased.

Interest among renters in Arabian Ranches also significantly declined from the fourth most popular search in the third quarter to sixth in the fourth quarter. Searches for homes to rent in Jumeirah Lake Towers and Jumeirah Beach Residence increased.

“Recent price rises means this community now has to directly compete with other sought after areas such as Umm Suqeium, Jumeirah and The Springs,” propertyfinder said.   

Dubai Marina was the most searched area for buyers and renters in the fourth quarter in terms of property views and emails sent, noted the report.

Property in the Marina represented nearly 19 percent of all buyers’ searches followed by Palm Jumeirah (10 percent) and Jumeirah Lakes Towers (7.3 percent).

Renters showed increased interest Jumeirah Village Circle, which jumped from nineteen to eleventh position in terms of buyers searching, doubling their share “due to the number of properties available at low prices,” said propertyfinder.

Property prices in Dubai soared after the city opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments.

From start-2007 to mid-2008, prices rallied almost 80 percent, Morgan Stanley estimates showed, with billions of dollars worth of new projects launched by local developers.

But home prices in Dubai, the Gulf property market that had the biggest reversal because of the financial crisis, have declined more than 60 percent in the wake of the global crash.

Rented property priced at AED60,000-80,000 annually remained the most popular search criteria for the third quarter running followed by those priced at AED80,000-100,00.

“AED0-100,000 cater for nearly half the searches at 46 percent, this is due to the young workforce including young couples and singles looking for better value apartments,” said propertyfinder.

The most searched price for property to buy was AED1-1.5m (15.6 percent) followed by AED1.5-2m (15.5 percent) and AED500,000-1m.

“Some 30 percent of all searches are for properties valued less than AED1m,” noted the report.

Two bedroom properties were the most searched for and emailed category in terms of sales and rentals in the fourth quarter. Two bedroom homes represented over 22 percent of all buyers searches and just over 30 percent of renters searches.