The team at Dubizzle sat down with our Head of Brokerage, to discuss off-plan and secondary in 2018.
The past year has been a period of transformation in the UAE real estate market. With a more mature marketplace having set in, clearer regulations and the private and public sector embracing innovative technologies – the UAE is focused on being a technologically advanced, sustainable market. Betterhomes, one of the UAE’s oldest and most established real estate companies took inspiration from this and revived their brand for this new era. We sit down with Richard Waind, Head of Brokerage at Betterhomes to take a look back at the past 12 months and how new regulation, off-plan properties, softening prices and foreign investment has affected the current market.
Since the surge in off-plan units released last year, combined with flexible payment plans introduced by developers, there has been a slight concern for how the secondary market is holding up. The new payment plans which allow individuals to buy off-plan units without having to foot an initial large bill have enabled first time buyers to enter the market and fulfill the dream of owning a new home which once seemed all too out of reach. Richard expands, “In 2017 off-plan sales accounted for 70% of the total market. End users and investors were attracted by the innovative payment plans and deals on offer by the developers, and many first-time buyers, priced out of the secondary market by the 25% mortgage cap, were able to get onto the property ownership ladder. Undoubtedly the off-plan activity took investment and buyers away from the secondary market and prices across Dubai in that sector fell as a result.”
Although the focus has been on off-plan, the secondary market has picked up again, Richard explains, “Over the last six months we have seen that balance shift to a more 50/50 split between off-plan and secondary sales. In particular, we have seen tenants and end users realize that there is real value to be found today in the secondary market and activity in this sector has grown. That has been mirrored by an increase in mortgage transactions in 2018 which suggests a shift to secondary transactions.”
With value once again be found in the secondary market, it shines a light on the issue of price sensitivity in the market. “It sometimes takes a seller a period of time to realize the price sensitivity and to adjust their asking price accordingly so the difference between an asking price and the actual transacted price can be quite high,” said Richard. Sometimes it can be difficult to manage sellers’ expectations and “for many who bought at a higher price that cannot or are unwilling to accept what today’s market will offer, we would always recommend exploring the rental option.” However, as the government is as keen as ever to keep transactions high and aid people to own rather than rent, they introduced the new 10-year visa. “Recently we saw some sellers looking to increase asking prices in the wake of the recent 10-year visa announcements. While we welcome the announcements and expect this to increase stability and certainty within the market, it is too soon for that to have an impact and we await further clarity on the detail on the changes later this year.”
The new 10-year visa, amongst having other economic benefits, also has the potential to bring further foreign investment into the UAE. “We expect to see an increase in investment from the expat community living in Dubai, given confidence from the visa changes, as more people crunch the numbers and realize they would be much better off buying and owning a property over the medium to long term rather than renting and paying off someone else’s mortgage” explains Richard. Foreign investment has already been immense during 2018 so far as Dubai Land Department announced AED 21 billion has been invested into UAE property from 143 nationalities in H1 2018, thus the added benefit on the new visa is sure to increase this number.
As the UAE marketplace transforms, so does the homegrown, renowned Betterhomes brand, inspired by positive changes in the real estate market over the past 12 months. They have revived their old brand to a fresh modern look and feel to reflect their growth in a maturing UAE real estate market. Check out their new website here: https://www.bhomes.com