The year started out on a very bullish note, healthy levels of transactions were recorded in January which came off the back of a strong finish in the last two months of 2021.
Consumer confidence is evident with buyer registrations increasing steadily in the last month. Buyers aren’t window shopping, they are serious; they know what they want and are committed. Back in 2007, when properties were selling at fever pitch and we were demanding pre-approvals to be in place before entering a sales contract.
It’s a must to have all your ducks in a row, with the deposit ready and pre-approval in hand as there are multiple buyers for most properties. Bidding wars are also becoming the norm, with the financial status of the buyer determining who will secure the deal, based on who can complete fastest.
Who wants what and why?
Residents who are going to make Dubai their long-term home have decided that they should buy rather than rent. Eighty per cent of the deals closed by our team in January were for owner-occupiers rather than investors. The lack of rental inventory on the market is driving prices through the roof. Some units are fetching up to 40 per cent more than two years ago. More so than ever, tenants have been subjected to landlords issuing more vacating notices. Many owners are trying to leverage the rising prices. In turn, the tenant has now become the first-time buyer waiting to occupy his new home.
We will also welcome new rental inventory into the market when Emaar and Dubai Properties hand over new properties in Arabian Ranches 2 and Villa Nova, which should be more affordable. Buyers are on the lookout for villas on large plots with potential to extend the property and are more adventurous than ever with their renovation plans.
The demand is still high for larger living spaces, which is a direct result of Covid-19 and families spending more time at home. In Arabian Ranches, the highest price was recorded for a number of years at Dhs1,764 per sq. ft. in late January.
Upgraded and upsized
Sellers who bought properties two or three years ago are now coming back onto the market with their upgraded properties, showcasing what is possible. Many buyers are happy to pay for the upgraded property, as they want a turnkey solution and do not have the know-how or the time to do the renovation themselves. As a result, upgraded and vacant properties are commanding a premium. A lot of buyers are upsizing to their next property on their Dubai real estate journey.
We have experienced a high volume of chain deals this month where the buyer has to sell one property in order to buy another. It’s all very doable with a knowledgeable broker who pushes the deals in tandem to complete with both timelines in mind. One cautionary note, a hike in US interest rates will be reflected in the UAE’s lending rates for 2022.
The Central Bank of UAE adjusts the domestic interest rates in conjunction with US rates meaning that the interest rate hike could happen as early as March and would impact the cost of funds for borrowers. Early indicators are favorable for the market this year. As Expo draws to a close, we expect to see more transactions in the second quarter of the year. However, we believe the prices will remain steady with the volume of buyers in the market.
Dubai property values now stand on average at Dhs990 per sq. ft. Forecasts are predicting a price increase of 5-10 per cent this year in the secondary villa market. Last year, we saw prices rise as much as 35 per cent in Arabian Ranches, but we are still about 23 per cent off the all-time high of 2007-08, so the recovery period has further to run.
Debbie Cope is the owner and managing director of House Hunters Real Estate.
News Source: Gulf Business