As the property prices recover in Dubai, investors are holding back the sale of their assets to bargain for a better price, as an element of greed has set in, according to analysts.
They said signs of recovery in the real estate sector are underway and the newly announced regulatory measures, local availability of the vaccine, and the upcoming Expo 2020 festivities will help further revive the sector during this financial year (FY).
“During the first quarter (Q1) of FY 2021, it has become apparent that due to the consistently high numbers of buyers in the market, we have seen a transition into a seller’s market. We have identified that over this period many homeowners are holding out for a ‘better price’ and an element of greed is now beginning to set in with owners’ expectations,” analysts at real estate consultancy Colliers said in their latest report.
“This inflated owner expectation accompanied with a supposed shortage of supply is causing prices to spike in a relatively short period of time,” the analysts said in their Q1 report.
The Colliers survey found that the majority of participants in its survey agreed that currently the quantity of buyers registered outweighs the supply in popular areas within Dubai, as agents informed the firm, they are running low on inventory.
Recovery in progress
Real estate consultancy JLL said lower sales prices have yielded a 15 per cent increase in sales volume for Dubai in Q1 2021, as compared to the corresponding period last year.
More end-users have taken the opportunity to enter the market because of the affordability factor.
Investors closing on attractive villa and townhouse deals have led to marginal recoveries in sale prices of 2-3 per cent, as compared to the previous quarter, said Dana Salbak, head of research at JLL Mena.
Dubai’s residential market stock increased to 607,000 units after an addition of 10,000 units in Q1 2021, JLL said.
The firm added that for the remainder of FY 2021, an additional 46,000 units are expected to be added.
In Abu Dhabi, around 200 residential units were delivered, bringing the total stock to roughly 265,300 units.
By the end of FY 2021, approximately 11,700 units are scheduled to enter the market, according to JLL.
Strong demand for villas
In the residential sector, villa sale prices increased by 3.5 per cent and 2 per cent in Dubai and Abu Dhabi, respectively, when compared to the same period last year, it said.
As work from home (WFH) has become a central aspect of post-Covid-19-pandemic life, JLL observed that strong demand for good quality villas and townhouses have been driven by end-users capitalising on favourable payment plans, lower prices and opportunities to upgrade space.
Analysts at said properties adapting to shifting consumer demands reflect the domestic market is evolving.
It said a large emphasis of the FY would be re-envisioning spaces as tenant and end-users find community amenities more appealing.
“As roles of different properties are shifting, property managers will need to offer residents an optimal way of living and working with a blended and multi-purposed dynamic. The successes and failures of the multi-purpose concepts will provide an opportunity and insight into how the modern-day tenant has evolved, allowing the future of real estate to take a step forward in creating properties that are adaptable to an individuals’ needs,” Salbak added.