So, the softness in the real estate sector continues?
It’s a very difficult market to predict. People have been saying we’ve bottomed out for the last six months, but honestly we still don’t know where the bottom is.
There has been a lot of off-plan activity that has perhaps given an impression of a booming market, but that has been driven by aggressive pricing, good payment plans and so on.
If you take somewhere like the Springs, a standard two-bed villa is around AED1.6m – down from AED2.1m, AED2.2m two years ago. In terms of rent, luxury areas like Dubai Marina and Downtown Dubai have seen double-digit percent declines.
Is this to do with oversupply?
There are a lot of new units that have come on the market, and they’re not all moving. If you look at somewhere like Jumeirah Park, there are lots of new villas but nobody’s living there.
People are now happy to move further afield to get the space they require for better value; when you look at the 25 percent deposit requirement and fees of seven to eight percent – which were designed initially to take the heat out of the market – that is a lot of money when you’re talking about a AED3m-plus villa.
The huge employment packages for expats just aren’t there anymore.
But we’re seeing lots of units sold, in developments by Azizi and so on?
We’re seeing a rise in the affordable sector and that is rebalancing the market, which needed to happen. And this is being driven by owner-occupiers more than investors; people realise they don’t want to be paying their landlord money that could be going to themselves.
Why should you buy now then?
All the above means there are some great deals to be had as sellers and developers are having to be more flexible.
We think this will be the case for the rest of the year at least. If you’re thinking of buying, and think you’ll be here for another five or six years, then now is the time do it – the market has never been more accessible.
A soft market also means soft returns, though?
If you’re looking for a return, then you’re not going to see one for a few years. In many ways that is good for the market as it removes the speculation and the flipping – which led to the volatility. Stability is good for any investment.
Joanne Phillips is general manager of the mortgage division at Holborn AssetsFor all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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