- Most Dubai sales are off-plan
- Prices dropping amid Iran war
- Buyer interest falling
Dubai developers have started offering discounts and flexible payment terms to draw investors towards off-plan homes – hitherto a growth driver. Within the first two weeks of the war, property companies began shaving prices as much as 10 percent, hoping to sway buyers.
Projects in Dubai Creek Harbour – a major development by Emaar 10 minutes from the city centre – dropped off-plan prices by 9 percent, agents in the area told AGBI.
Binghatti, another big privately held company, which became one of Dubai’s largest developers last year thanks to roaring off-plan sales, hosted an investors’ event last weekend offering similar discounts for projects completing next year.
Off-plan accounted for 69 percent of sales transactions and 65 percent of value in Dubai last year, according to the local land department, but Emaar, which is listed on the Dubai Financial Market, said last week it “wasn’t worried” about any impact from the war.
“Developers who launched in January and February are now trying to incentivise and bring brokers in for lunches, reminding them they are still here. It’s slow,” one real estate professional told AGBI, asking not to be identified to protect his relationship with developers.
One UAE developer, who also asked not to be named, said that while the company is pushing on with new launches, the interest for off-plan sales has been “incredibly slow”.
Real estate agency Savills told AGBI earlier this week that construction is continuing regardless as developers hope they can still sell out over a longer period.
Branded homes are particularly sensitive to shocks from the war. These units have an outside company attached, such as Pagani and Bugatti in the car world, Armani in fashion or Four Seasons in hospitality. They have proved popular in the UAE on the part of developers who charge higher margins and among status-conscious buyers.
“Branded residences will depend on how long this goes on,” the real estate professional said. “At the end of the day, a billionaire doesn’t have on his list of priorities, ‘How good is the air missile defence?’ They don’t care. As soon as things go bad, they go elsewhere.
“If this continues for six months, they don’t need to be here. If this goes on for a long time, yes, it could mean the end of those high-end branded residences.”
Further reading:
Further reading:
Off-plan sales in Dubai fell 21 percent month on month in March, to 9,368 transactions, Dubai Land Department figures show. In the year to date, deals are still up 15 percent on a strong first two months.
Most off-plan homes are sold with payment plans, with investors trusting that developers will complete on time as they pay instalments.
Atkins Realis, an engineering and project management consultancy working in Dubai, said this week it has yet to see major disruptions from the war, but that project cancellations and delays are likely.
“We haven’t been slowed down [by logistics] so far. A lot of what we use in this country is brought in [from elsewhere]. There will be projects that naturally pause, but for the moment, no impact,” regional CEO Campbell Gray told Dubai Eye radio station.
“The basic fundamentals are still there. Population growth, urban development, place making, the need for mass transit. The national development programmes are still there. But, inevitably there will be some pause and some projects will be cancelled,” Gray said.
Leave a comment