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Dubai realty turning into seller's market?

Dubai - Buyers signing on dotted line a lot quicker than they previously would have on fear of missing out on a property they like

Is Dubai’s realty sector making a dramatic transition to a seller’s market despite the lingering headwinds of the pandemic-induced economic slowdown? Property pundits say they are witnessing such a shift with the ratio of buyer enquiries far outstripping new supply.

“Ready properties of high-quality finishes that are kept well are in high demand and with so much competition from buyers at the moment, we are seeing undersupply issues leading to property price increases,” property consultancy company Allsopp & Allsopp says.

Dubai is in the midst of a seller’s market with Allsopp & Allsopp’s current ratio of buyer enquiries to new property listings at 8:1.

“Buyers don’t have a lot of options in the market and urgency is being shown as prices are on the increase and have been doing so for the last few months. They are signing on the dotted line a lot quicker than they previously would have through fear of missing out on a property they like,” an analyst at Allsopp & Allsopp said in a report.

“If you go back a year-and-a-half, we were trying to convince buyers to look at properties as Dubai was in a buyers’ market. They weren’t keen to view as there was so much supply and with the supply comes less urgency. If a property they like was sold, they would simply find another similar property. However, we are now seeing multiple buyers for one property as there is little supply therefore creating urgency, and at times, driving the price upwards by means of outbidding each other,” CEO Lewis Allsopp added.

The company claims that it has a waiting list of buyers for certain properties — meaning that those properties in high demand are selling before they reach property portals such as houza.com, a newly-launched broker-owned property portal.

“What we are seeing is that buyers are contacting agencies to find out what is becoming available. They are not waiting for properties to go live online. This is an encouraging sign for the Dubai property market and shows its maturity despite a global pandemic,” he said.

It claims that it has a waiting list of buyers for certain properties — meaning that those properties in high demand are selling before they reach property portals such as houza.com, a newly-launched broker-owned property portal.

“What we are seeing is that buyers are contacting agencies to find out what is becoming available. They are not waiting for properties to go live online. This is an encouraging sign for the Dubai property market and shows its maturity despite a global pandemic,” he said.

The real estate brokerage reported record-breaking revenue generation for January 2021 when compared to any other month in the company’s 13-year history. The loan-to-value (LTV) ratio and low-interest rates are a common denominator when it comes to buyers having the ability to step onto the property ladder. “First-time buyers make up 74 per cent of our business at the moment due to the government stimulus package increasing the LTV and lowering interest rates — it has never been a more affordable time to buy,” says Allsopp.

For example, in 2019 a property could be worth Dh2.5 million with a down payment of 33 per cent at Dh800,000, but during the second half of 2020 and going into 2021, the same property could be purchased for Dh1.9 million with a down payment of 26 per cent at Dh400,000.

Not only is it a lot cheaper, but clients are also paying less in upfront costs, he explained.

He said end-user buyers would consider paying more if they find a property that they like. “Some are holding off on buying cheaper units and placing themselves on waiting lists hoping for the right property to become available and are willing to stretch their budget to the max.”

The brokerage reported that the average sales price has risen in a number of areas across the city. For a Type 2M villa in the Springs, the sold price rose from Dh1.82 million in April 2020 to Dh1.975 million in September 2020 to Dh2.475 million in January 2021. For Victory Heights, a Type B villa’s sold price in May 2020 was Dh4.1 million compared to Dh4.8 million in August 2020 and Dh5.1 in December 2020.

— issacjohn@khaleejtimes.com