By Claire Ferris-Lay
Apartments in tower peaked at AED7,000 per square foot during boom
Property prices for luxury apartments in the Burj Khalifa, the world’s tallest tower, have fallen to as low as AED2,100 per sq ft, real estate experts have told Arabian Business.
High service charges coupled with distressed sales are being cited as the reason for the drop.
“I am telling [my investors] to buy; AED2,000 per sq ft is a steal. I have been offered one [apartment] for AED2,100 and a second one next door for AED2,500,” said Manoj Prasad, CEO and managing director of the Dubai-based Signature Group.
“I am even telling my family to invest. When it launched, it was a dream to have an apartment in the Burj Khalifa but that was for AED7,000 per sq ft and was not at a price that my investors wanted to invest. For my investors AED2,000 is a distressed buy,” he added.
Owners are currently marketing apartments in the luxury tower for around AED3,200 per sq ft but will likely accept an offer of AED2,930, said Samantha Liborwich of Dubai-based real estate agent Allsopp & Allsopp.
“There is always going to be somebody that says I’ll take it off your hands now for AED2,800 – they’ll be investors in the market that don’t really need to buy but they know if they do, they would be able to resell it,” she said.
Unveiled at the height of Dubai’s property boom, the world’s tallest tower was inaugurated in January 2010 with a glittering water and fireworks display. Developer Emaar sold 90 percent of the tower’s 900 apartments ahead of its launch.
The 828m-tall Burj Khalifa also includes 144 Armani-branded residences, 37 floors of office space and the 160-room Armani Hotel.
But the luxury tower saw rental prices slump in the wake of a global financial crisis that saw house prices in Dubai more than halve in a matter of months. Nine months after its launch, the cost of renting a studio flat had plunged 40 percent to AED6,666 ($1,815) per month, while one-bedroom apartments were on offer at AED10,000. An estimated 825 of the tower’s 900 apartments were vacant.
The cheapest property in the Burj Khalifa currently listed on website, PropertyFinder.ae, is a 519 sq ft apartment for AED1.27m or AED2,456 per sq ft.
Owners of apartments at Burj Khalifa pay an annual service charge of AED55.12 per square foot for chiller charges and maintenance of communal areas compared to AED21.50 in Emaar’s Residences in Downtown Dubai, said Ben Holiday of Dubai-based Brix Property Partners.
“Prices have dropped simply due to the fact that the service charges in the building are so high. The services charges are eating into a lot of the yield that landlords are gaining so it’s a big issue for them. A lot of the landlords now want to sell because of that very reason,” he said.
Something seems to be wrong .
Why would any one want to sell at 2,100 or even 2,500 when the going price is between 2800 and 3200 .
Quoting lesser known companies with even lesser know CEOs is unlikely to lend much credence to the report.
If anything demand for Burj Khalifa has been rising for the past few months as buyers who want a prestigious and iconic property are undeterred by higher service charges . Infact the quality of upkeep and facilities offered justify these higher fees.
The truth is there are people who really want to cut their losses and get out of the Dubai market, they have been clinging on hoping that they can at least get their money back. But their comes a time in certain cases where enough is enough. At least they know that because the devlopment is Emaar it will sell easier than the rest, if they drop the prices like that. We're only talking two apartments, however, I guess that other owners will have to follow their example should they need a quick sale.
Wouldn't even part with 1000 aed per square foot, fact is service fees will only increase , levels or quality of maintenance is very questionable and in a few years time it won't even be the worlds tallest building (Jeddah)..
There is only one way dubai real estate on a whole is heading and that is down, negativity in this market far far outweighs positivity.
Value of property is what another is willing to pay for; i.e. value of the most recent actual transaction.
NOT the price some sellers / agents advertise their property!!!
when an estate agent starts to say 'have even asked my family to invest' it pretty much sums up what a bad investment it is, how desperate he is and how badly he needs business.....
Hiked up maintenance charges would kill the market. Everything in Dubai carries a high profit margin that too after spending high amounts on commission to obtain the contract. Those things we can do for AED 8~12 per Sft with enough profit margin is quoted for AED 16~18 per Sft.
this is absolutely wrong information
there is nothing lower than 2500 per sq ft and has been steady at that price
Buyers buy with emotion and justify with logic, when rental yields net no more than 2%, why on earth - other than living in the property, or buying to massage your own ego, would you buy in the Khalifa? As a property which offers a return on investment, its a pretty poor investment, for a property which "May" appreciate in value, well that is the more likely.
Agents telling their family to buy there, seems a cheap way of increasing demand.
Today units are trading at 2600(actually selling) ..... There are still owners asking for 3000 but they are not motivated . Agree with birdie the above comments are obviously made by un educated agents who now resort to getting their family to buy !!