Dubai: Residents, investors opt for off-plan units due to lack of affordable listing

Developers are offering attractive payment plans for off-plan projects including up to eight years after the handover

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Published: Mon 1 Jul 2024, 6:36 PM

Residents and investors are opting for off-plan projects due to a lack of affordable inventory for sale, brought about by a rental market that has seen prices more than double in some communities post-pandemic.

The demand for Dubai’s off-plan properties has grown tremendously among residents and foreign investors due to lower prices and higher returns than other major cities around the world, as well as the double-digit rental income that properties in the emirate can offer.

Meanwhile, expat residents in Dubai are buying off-plan units to beat the competitive rental markets.

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“Investor activity is being heavily skewed towards off-plan projects, while residents are largely split between the off-plan and ready property segments, with many opting for an off-plan project due to lack of affordable inventory for sale.

This is coupled with a white-hot rental market that has seen rental prices more than double in some communities post- pandemic,” said Zhann Jochinke, director of market intelligence and research at Cavendish Maxwell.

Developers are offering attractive payment plans for off-plan projects including up to eight years after the handover. However, banks only finance ready properties.

In May, 10,598 off-plan Oqood transactions were recorded, a monumental increase of 47.1 per cent from the previous month. Title deed sale volumes also witnessed a similarly impressive increase, growing by 48.6 per cent.

Dubai has seen a number of new mega project launches worth billions of dirhams in 2023 and 2024 to meet the growing demand for off-plan projects from residents and foreign investors. In 2023 and 2024, Emaar Properties launched two mega projects worth Dh128 billion, a Dh30 billion Venice project by Azizi Developments, and a multi-billion Palm Jebel Ali by Nakheel.

In addition to these mega projects, other developers such as Aldar, Damac Properties, Danube Properties, Binghatti and others have launched a large number of projects worth billions of dirhams over the past two years.

Property Monitor, which is part of Cavendish Maxwell, said new off-plan development project launches surged to reach record highs, with just over 15,500 off-plan units added to the market for sale with an anticipated combined gross sales value of Dh41.4 billion.

This strong demand and launch of new off-plan projects are reflected in apartments, villas, and townhouses.

According to Betterhomes’ data, Dubai has seen a remarkable surge in off-plan villa transactions, which increased by 209 per cent in May 2024 compared to previous month.

“Post Covid-19, people became more interested in larger spaces rather than apartments, leading to a high demand for villas. The surge seen last month was due to the launch of new master communities by Aldar, Damac, and Emaar, which boosted sales. Additionally, with rising rents, people are preferring to buy instead of renting,” said Sijo Jose, off-plan manager at Betterhomes.

The top five areas leading the surge in villa transactions were Haven, Tilal Al Ghaf, Dubai South, Reportage Village and MBR City.

The increase in villa transactions and value demonstrates a growing preference for spacious and luxurious living spaces. The rise in apartment transactions also indicates a healthy demand for urban living, catering to a diverse range of buyers. Developers are responding to this surge by launching new projects, offering a wide variety of options for investors and homeowners alike. The market is expected to continue its upward trajectory, providing lucrative opportunities for both buyers and developers,” said Betterhomes.

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