The off-plan sector has been a major factor in Dubai’s real estate market’s growth.
The consistent demand for off-plan real estate in Dubai indicates that the market’s steady growth momentum will remain for the foreseeable future.
The off-plan segment, which increased to 58% of all sales transactions and 50% of all transaction value in August, has been a major factor in Dubai’s real estate market recovery. In August 2023, there were 6,837 off-plan property sales, up from 4,189 the previous year, a 63% increase in volume year over year. While the price of unfinished homes increased by over 103% to Dh17 billion, well outpacing the Dh8.26 billion,
According to Property Finder, ten regions were responsible for over 65.3% of the total sales volume and 53% of all transactions in the off-the-plan sector. These comprised the Jumeirah Village Triangle, Al Yufrah 1, Arjan, Business Bay, Dubai Harbour, Dubai Creek Harbour, Jumeirah Lakes Towers, and Jumeirah Village Circle in addition to the newcomers Sobha Heartland, Al Yufrah 1, and Madinat Al Mataar.
According to Betterhomes, the top five off-plan transacted neighborhoods in September were Mohammed bin Rashid City, Business Bay, JVC, and Dubai Marina.
According to Property Finder’s chief revenue officer Cherif Sleiman, “the off-plan segment is experiencing an unprecedented surge.”
In the years after the epidemic, the local real estate market has experienced a revival, with huge demand for both flats and villas.
Despite a slowdown in the secondary market, the majority of industry professionals think that the off-plan market will continue to drive and dominate the local real estate market in the near future.
Both public and private developers have been hurriedly building projects as a response of the exceptional demand. The Oasis by Emaar, valued at Dh73.4 billion, and Venice, a mixed-use desert oasis community project by the Azizi Developments, valued at Dh30 billion, are just two of the projects that have been unveiled in the emirate of Dubai in 2023 alone, totaling more than Dh110 billion.
Additionally, private developer Danube Properties unveiled five projects in 2023, with the first tower at the Dh2.5 billion Oceanz selling off very quickly. All of the projects that were introduced this year were successfully sold out. Similar to this, the first phase of villas on the Palm Jebel Ali from master developer Nakheel Properties launched and sold out entirely on the first day.
The majority of the newly-launched projects by the developers were either fully or largely sold out in the first few weeks of the launch this year, which is a positive sign that foreigners and locals still anticipate profitable investments in the near future, and this is assisting in maintaining sustainable demand for the off-plan properties in the emirate.
Due to the exceptional demand for off-plan properties, overseas developers are entering the local market and providing consumers with a variety of options. In the past year, a large number of European developers, primarily from the UK, Italy, Switzerland, Turkey, and France, have entered Dubai’s residential real estate market.
Investors can purchase a property at a lesser cost than they would with a completed unit by purchasing off-plan properties. Additionally, off-plan homes frequently come with flexible payment options, which is helpful for investors. Customers can reduce the risk of delays by thinking about a post-handover payment plan because the developer is responsible for finishing the project on time and receives a sizable payment after handover. However, each project is unique, and comprehending the accompanying payment schedule
Better Homes experts say that there are several reasons why now is an excellent time to buy in off-plan residences in this market.
First off, the viability of buying ready residences for investment purposes has changed due to the current environment of rising mortgage rates. Despite higher rental yields, rising mortgage servicing costs have led to lower net yields when all costs are taken into account. As a result, the economics of investing in homes that are ready for sale for returns have declined.
By allowing investors to allocate cash toward houses still available at their original cost, off-plan investments offer a particular advantage. The adaptability of payment plans ensures better financial management flexibility and lessens the impact of high borrowing rates.
The demand for residential homes is also significantly fueled by Dubai’s population expansion. The UAE government has put in place a number of efforts to encourage population development in Dubai, drawing in a continuous stream of people. Surprisingly, occupancy rates for properties managed by Betterhomes are at all-time highs, hitting 95% for freehold houses and 97% for leasehold properties. This pattern suggests that there will always be a need for rental homes.
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