This equated to AED13,500 ($3675) per square foot – nearly 20% higher than during the peak of the property boom in Dubai.
The news comes just days after Arabian Business reported sale prices on the luxury Palm Jumeirah development have sunk to a four-year low, with apartments being offered for as little as AED650 ($176) per sq ft.
In 2008, before the property crash, Colliers reported that Armani units in the tower were valued at around AED11,000 per square foot, so do sellers need to get with reality and lower their prices and expectations for the market to move forward?
Michael Michael, director, Landmark Properties:
In certain areas absolutely [asking prices are inflated]. There is still a misconception of what prices should be as opposed to what “I want back for my investment”. However, in the Burj Khalifa area we feel that prices are positioned correctly in line with market availability.
There are still some extravagant prices in the market, however, these are usually one offs as sellers can advertise directly on dubizzle and hope that they can get their asking price.
Richard Paul, associate director at real estate agency Cluttons:
There are many properties on the market in all locations through the Emirate where asking prices are unrealistically high, this is not anything new and happens throughout the world not just Dubai. Some landlords do not want to accept that prices are at the levels that they are and therefore place them well above market value.
If the landlord has carried out the necessary due diligence into the subject market and taken the right professional advice, then he or she should have realistic expectations. I must add that looking on Dubizzle at asking prices is by nowhere sufficient enough, to be defined as 'the necessary due diligence'.
Jesse Downs, director of management consulting at Jones Lang LaSalle:
Sellers do need to be realistic in order to transact, but often this ‘realism’ requires a razor sharp, targeted approach to researching and understanding the value of a property. It is simply not realistic to take average trends across Dubai, or even within one single location, and apply it to an individual building or unit. Ultimately, value is determined by the price willing to be paid by a buyer.
Although growing, the current pool of active buyers is still relatively limited, so they have the luxury of choice. Thus, quality matters and this can vary widely across buildings and between units in the same building or compound. Quality is determined by many thing from the oft discuss features like views, fit-out and layout to less often discussed features like efficient use of space, maintenance of units and common areas, infrastructure, and things like sound pollution from neighboring construction sites.
There can be a disconnect between the sellers objectives and the buyers preferences.
Asking prices, especially for units not listed through professional agencies, can be highly volatile and do not necessarily reflect or correlate with achieved prices. This creates “noise” is the market that can often distort expectations.
Matthew Green, head of research and consultancy at real estate consultancy CB Richard Ellis:
The main issue at this stage is that many investors purchased apartments at the top of the market at rates that are frankly astronomical in comparison to where values are now positioned. The price differential is huge. Evidently the market has since corrected and investors have been left with a product that they simply cannot sell, even for 60 – 70 percent less than peak prices.
There is also the rather large issue of service charge, which for the Armani Residences is in excess of AED80 per sq ft. Clearly this additional cost could be a major issue for some end users and from an investor perspective takes a huge chunk from any potential rental yield.
Burj Khalifa agent:
An agent to recent sold an Armani Residences apartment told us a lot of sellers were looking to take advantage of the new rules extending visa for investors from six months to three years. However, he believed sellers’ expectations were still very high and out of synch with buyers
“A lot of properties have been listed recently and generally around AED29m to AED31m for a 2 bed. However, even overseas investors from Russia and Iran are unlikely to pay more than AED15m, what is more likely going on is a number of owners are now trying to artificially lift the market.”For 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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