Report shows interesting Dubai Real Estate Properties price trend

Dubai real estate prices are experiencing some changes. Prices in older districts located in Dubai have are changing and adjusting, with Deirah and Bur Dubai topping the list. Meanwhile, properties in Dubai Marina are changing as well. Studio and three-bedroom apartments that are on sale saw a decrease of 18% and 14% respectively. Renting rates for studios stayed the same, while three-bedroom renting rates are decreasing by 7%.

This report from Dubizzle also says apartments in Dubai Marina is the most popular real estate in Dubai for 2 consecutive quarters, with a staggering 4.9 million searches for one-bedroom apartments between April and June this year. Sales prices here have been decreasing, with an 18% and 14% change in studio and three-bedroom apartments respectively. Dubai Marina’s popularity remained at the top spot for two consecutive quarters in a row, with an impressive location being the most searched during this year’s Q2 with over 20 million searches.

Property price tags for Dubai real estate’s prime location Palm Jumeirah, saw a change in sale prices as well.  Prices for studio and two-bedroom apartments are increasing from 1.45 Million to 1.54 Million and 3.2 Million to 3.5 Million respectively.

The other side of the city also had price changes. Real estate in Dubai’s Deira showed price increases due to a lack of new properties along a sustained demand by occupants. This is why even if prices in these so-called older areas are relatively more affordable than new property developments, there is still a price shift that makes it better aligned with property prices across Dubai. Rental prices for studio apartments in Deira climbed by 18%, while those in Bur Dubai went up from 60K to 65K. Three-bedroom unit prices in the same location also increased from 150K to 158K.

Asked to comment on the report, Dubizzle’s Product Marketing Manager for properties Ms. Ann Boothello said: “The Dubai property market is softening as per the price changes experienced in Q2 this year. Some areas have experienced while older areas in Dubai showed price increases in reflection to a maintained level of demand for these older units and the alignment of their prices with those in newer areas in Dubai. An example of this is that now a studio in Bur Dubai is rented out for AED 65,000 annually and in Dubai Marina at AED 70,000.”

She continued to say that “prices of properties for sale decreased across Dubai, with the exception of studios and 2 BR apartments on the Palm Jumeirah increasing up to 6%. Abu Dhabi on the other hand, experienced price increases in for sale and rent properties; however Al Reem Island saw a drop in prices for 1, 2, and 3 bedroom apartments.”

New Luxury Hotel to be operated by Jumeirah Group in RP Global’s Mixed-use Development

RP Global, the leading Dubai real estate property investment company, has appointed the global luxury hotel company Jumeirah Group, to operate a mixed-use development under RP Global’s US$1-billion iconic tower. Called the Jumeirah Business Bay, this new piece of real estate in Dubai will feature a hotel with 200 rooms, 350 serviced apartments, and 290 luxury residences under the Jumeirah brand.

Offering stunning views of the Burj Khalifa and other parts of the city such as Downtown Dubai, the super-tall tower will have a floor area amounting to over 3 million square feet. Designed to be an urban luxury destination, the tower will showcase a rich variation of food and beverage stalls, an award-winning Talise Spa and Health Club, banquet and conference facilities, and an open-air roof top Sky bar. Situated just behind the Dubai Metro station in Business Bay, this new Dubai real estate property is designed by the distinguished Atkins Global architectural and engineering firm. Atkins Global is also the one responsible in designing the world-famous Burj Al Arab hotel.

Among the tower’s exhilarating features is its sky attraction. It’s a dynamic interactive experience literally higher than anything else. The tower gives its visitors stunning vantage points high above Business Bay.

 “RP Global is a company committed to excellence, and we look forward to working together and operating this outstanding property. Jumeirah has a reputation for luxury and exceptional hospitality, and our partnership reflects the strong synergies between Jumeirah Group and RP Global. As Dubai moves towards its tourism vision of receiving 20 million visitors a year by 2020, we are proud to be strengthening our Jumeirah portfolio in Dubai”, says Jumeirash Group’s President and Group CEO Mr. Gerald Lawless.

Dr. Ravi Pillai, chairman of RP Group of Companies, which is the holding company of RP Global, stated that “We are investing close to US$1 billion of our own resources into Dubai’s real estate sector to develop a world-class tower that will be operated by the esteemed luxury hospitality brand, Jumeirah Group. RP Global is committed to superior quality and timely delivery and like the Jumeirah Group, we strive to create well designed, innovative lifestyle concepts for our buyers. Dubai’s resident population is growing rapidly and we are looking forward to adding an iconic tower to Dubai’s skyline in partnership with Jumeirah.”

The management agreement between the two companies was signed at a ceremony that took place at the Burj Al Aram, Jumeirah Group’s flagship property. Jumeirah Group currently has 23 hotels in operation scattered in Europe, the Middle East, and Asia. It has 25 more in the pipeline under the Jumeirah and Venu property brands.

RP Global is the real estate development company of RP Group of Companies, a conglomerate established by Dr. Ravi Pillai. It has operations in 20 cities across nine countries. The group has a wide-ranging stake in different industries such as hospitality, construction & industrial development, healthcare & wellness, and education & trading. It has executed projects worth over US$25 billion globally, and operates across Middle East, Africa, Australia, and Asia.

The Maturation of Real Estate in Dubai

 Dubai, compared to its neighbouring emirates and countries within the GCC, has been known to have a very distinct freehold on the way they conduct business. However, there has been a requirement for increased regulation in the market recently, which means that the free-reign of freehold might be coming to an end. But not for the wrong reasons.

After the property bubble collapse left so many investors with bad experiences a few years ago, it was high time for the government in Dubai to enforce strict procedures and rulings for the Dubai real estate market.

Over recent years, Dubai has seen increases in regulations and increased amount of stability in the market in what experts proclaim as a maturing of the market.

Typically there are many definitions of what may defined as a mature market, but a few key identifiers could be described as follows:

•    A market is mature when prices have reached a state of normalcy.
•    When movement in customers’ needs and desires do not appear to be evolving rapidly.
•    Consolidation by leading competitors reducing competition.
•    Market shares of leading competitors being solidified and changing gradually, if at all.
•    Regulatory frameworks, legal protections and regulations aimed at protecting consumers and businesses are in place and implemented.
•    Steady regular profits and growth for the developers.

The United Arab Emirates has only recently been classed as an emerging market by the MSCI. This means it has a long way to go before it’s on par with more developed countries and cities. But looking at the identifiers above, there are a few items pointing to market maturation. So we asked Andrew Chambers, CEO of GGICO Properties and long time real estate veteran, for enlightenment as to what would be the signs that a real estate market is maturing?

INCREASED REGULATIONS

-    Increased regulations aimed at reducing short term speculation and flipping is when speculators buy, with minimal deposit down and flipping or reselling before property is even registered with Oqood. Oqood is a service provided to developers by the Dubai Land Department which aims to ease the registering of all types of contracts between off-plan properties developers and buyers. It allows developers to manage their off-plan properties and participants within a simple framework and user-friendly bilingual Arabic-English interface.

While this was rampant before, it is much less prevalent now—with RERA regulations prescribing registration of transactions. Also, the rate of capital growth of property has slowed tremendously compared with certain years over the last decade.

MORE NEGOTIATIONS

-    Buyer and seller expectations on a price to exchange are at least close enough to allow for realistic negotiations. At present, sellers are asking higher prices than buyers are willing to pay. This has slowed the rates of sale in the market.

LESS RISKY FINANCIAL LEVERAGE

-    When small firms or individuals borrow multiple times and speculate on “off plan” or projects with payment plans in hope that they can resell and make a premium before later payments due.

STABILIZING MARKET PRICES

-    We still see more of a supply driven market, which has suited Dubai’s great growth and has worked when viewed over 10 years or so. But with a steady, measured and considered growth, a planned release of products will help stabilize the market. The market remains a little oversupplied at the luxury end and the impact of lower oil prices and stronger dollar will undoubtedly dampen the demand from overseas investors. However, domestic demand at the mid-end remains inelastic to these macro trends and developers and investors that capitalize on this will be amply rewarded in the years ahead.

BROKERAGE MARKET

-    Tremendous steps have been and are continuing to be taken to control the behaviour of brokers. Also, the slow down clears out many non-performing agents and agencies. Less rogue agents and slowing down the amount of players in the market will be good for market confidence and stability.

AFFORDABILITY

-    The last decade has seen an enormous volume of Top End/Luxury properties become available, which has sold well. Unfortunately, this has left behind the requirements of regular, salary earning expat demands from those living and working here, with requirement for more modest housing that can be afforded from salaries and a level of mortgage. This is now starting to be addressed by some developers in areas such as SO and DSC, where more mid level property, with good payment plans allowing people to buy to occupy.

CLEARANCE FROM BANKS BOOKS OF TOXIC/PROBLEM STOCK

-    The past 5 years has seen banks stuck with many non-performing or incomplete properties in default. This is not good for a stable property market. This seems to be resolved now, with many projects restarted with adequate finance and good business plan to see the construction to completion.

SUMMARY

Whilst there is some way to go for Dubai to be recognized as what the world sees as a Mature Market, Dubai has well survived turbulent times and a number of the issues raised here either resolved or in the process of being resolved.

Nevertheless, it is still important to keep Dubai as being seen as a robust and very positive market position in the World’s eyes.

This can be helped with the continued investment in infrastructure and continual innovation and investment in such opportunities as EXPO2020, WC Airport growth, continued development of tourist attractions such as mid range hotels, theme parks, and other attractions to boost further Tourism growth.