The total volume of sales in the secondary market was AED 8.6 billion in Q1, according to Luxhabitat
Despite flattening in the overall market, secondary residential market transactions remained relatively stable in the first quarter of 2018, according to new data from brokerage firm Luxhabitat.
According to the data, 622 villas and 7,050 apartments were transacted within the first quarter of the year in both the secondary residential and off-plan market. In the secondary market, the total volume of transactions amounted to AED 8.6 billion ($2.34 billion), compared to AED 10.1 billion ($2.75 billion) in Q4 2017.
In comparison, off-plan transaction volumes and the number of transactions fell almost 28 percent from the previous quarter, to AED 5.8 billion ($1.58 billion).
Luxhabitat noted that the drop is likely due to the announcement that Dubai developers need their projects to reach 50 percent completion before declaring their properties for sale, as well as pay off all the costs related to land.
Property Monitor statistics show 80,000 units are scheduled to be completed in 2018, with 2,000 units each to be delivered in Downtown Dubai, Business Bay, Mohammed bin Rashid City and Jumeirah Village Circle.
“We’re also seeing more extended post-handover payment plans, discounts and DLD waivers from developers,” saidLuxhabitat associate director Brigitte Tenbergen.
“What I perceive as general sentiment is that buyers are overwhelmed with the amount of projects and in no rush – they take their sweet time and are demanding discounts and waivers, as they are well aware that there is an oversupply of properties in the market.”
Sally Ann Ghai, another Luxhabitat associate director, said that “while it is true that the attraction of extended developer payment plans hook those buyers short of a 35 percent deposit for a AED 5 million plus home purchase, only a review by the Central Bank on borrowing rules will truly support a revival in the secondary market.”
Additionally, the Luxhabitat analysis found that the prime residential market in Q1 2018 totalled AED 5.3 billion ($1.44 billion), with secondary villa sale volumes far exceeding off-plan sales.
“For clients looking at a longer term investment, they may realise more value from a cooled and increasingly rational secondary market, with sellers now reality checked in their asking prices, compared to developers who are front loading pricing in most prime off-plan developments,” Ghai said.
“The question is whether off-plan can hold these values on delivery under weight of supply.”