Luxury property owners get back the courage to sell

After a two year gap, more property owners in Dubai are willing to take on developers and whatever incentive or offplan payment plan they come up with. This is being reflected in the gradual increase in property listings made by individual owners, and especially those with high-end homes on their hands.
And the deals and listings are getting bigger. Just in the last two days, two Emirates Hills villas (with a built-up area of 30,000 square feet plus) have been placed on the market with asking prices at Dh130 million, according to data from Luxhabitat. In late June, another villa (46,000 square feet of built-up) with a frond location on the Palm was listed for Dh219 million. A unit at the Address Residences in the Downtown had the owner asking for Dh200 million.

And the sales are happening too. It was on July 24 that a Palm villa was sold for Dh61 million, and the costliest revealed deal in the city this year, according to Luxhabitat. Another, for a Bulgari-branded home at Jumeira Bay fetched Dh60 million.
“Prices do seem firm now, with a consistency across the market of well-priced — but limited — listings,” said Sally Ann Ghai, Associate Director at Luxhabitat. “We enter September with a sustained flurry of interest by seemingly ready buyers who are ready to call it.
“Increased activity should further firm up price consistency, and increase consumer confidence in the luxury secondary market. While buyers have been waiting to sense whatever they feel is the bottom of the market for established secondary communities, the feeling as we enter the back end of this year is that the time has finally arrived.”

On the sellers’ part too, there is a realisation their time to make that move is now. “For many relocating European sellers, in particular, the beneficial exchange rate to their home currency has allowed them to sustain a lower sales price than they previously thought they could tolerate,” said Ghai.
Plus, buyers seem to have finally had enough of developers pushing offplan with extended post-handover plans. There were only a handful of sellout offplan launches in the year-to-date, which also indicates that more buyers are preferring ready properties than wait three to five years for their offplan handovers. Even when these offplan sales have five- or seven-year repayment terms.
According to George Azar, Chairman of Gulf Sotheby’s International Realty, “We are doing more deals of between Dh10 million to Dh100 million than ever this year.
“There are many factors at work, but the Brexit issue is helping British investors to move their wealth into Dubai … and they come looking for expensive properties. They are not looking for anything less than Dh20 million per property. A lot of German money too is moving here.
“And it’s helping with generating a premium on these properties — not all of them, but some, which is still good.”
Azar says that in the high-end space, his firm has been doing transactions of an average Dh15 million compared with Dh8 million on average last year. All these deals involved overseas buyers. But for properties valued at Dh1 million to Dh5 million, Gulf Sotheby’s sales are down by 50 per cent.
The three top investor destinations for the luxury-seeking investor/end-user are Emirates Hills, the Palm and Al Barari. “Another area where the high-end deals are taking place are for plots at La Mer,” said Azar. “These are for mansions the buyers will build subsequently.
“The big demand on the Palm right now is for existing super high-end properties for Dh40 million to Dh50 million — it’s an ego thing. These buyers want to go on Google Maps and show off their home on an island.”
Outside of Emirates Hills and the Palm, Ghai also finds Al Barari finding traction with buyers.
“Al Barari has been standout busy for both new and existing builds during 2018,” she added. “It will be interesting to watch trends unfold in various prime communities over the next 12 months, as there will likely be an increase in pace of sales. This would radiate through all secondary prime communities.
“Not every area is in exactly the same stage in the cycle. But in some areas, we are seeing an uptick in transactions driven by sellers offering pricing appropriate to buyer appetites. This will eventually swing the supply-demand scale towards a gentle increase in prices. Perhaps that will happen next year.”