Record high prices and aggressive off-plan payment plans by Dubai developers are pricing out buyers of the central districts and forcing them to look for properties in the outskirts.
As a result of prices peaking in the city’s hot spots, some of the affordable and economical areas are taking the lead in price surges as buyers and investors are shifting to these areas.
Property prices in prime locations such as Downtown, Business Bay, Palm Jumeirah, Marina, Sheikh Zayed Road and Dubai Hills Estate have been growing at single to double-digit rates on a quarterly basis during the Covid-19 pandemic due to high demand from millionaires and high net worth individuals relocating to the emirate.
In addition, international investors are snapping up off-plan properties that are much more economical than other global cities such as London, New York, Hong Kong, Paris, Singapore, etc.
Prathyusha Gurrapu, head of research and consultancy at Cushman & Wakefield Core, said citywide sales prices maintained their upward trend for the 17th consecutive quarter in Q3 2024, recording a robust 20 perent year-on-year increase.
Villa prices jumped 23 percent year-on-year while apartment rates grew 19 percent in the third quarter of this year.
Cushman & Wakefield Core data showed that suburban and affordable communities are leading the market.
“This surge is largely driven by relatively lower price points in these areas and the substantial price growth in central districts, pushing more buyers to invest in suburban regions. Discovery Gardens recorded the highest price increase at 43 percent, followed by Jumeirah Lakes Towers and Dubailand (Remraam) at 34 percent and 28 percent, respectively. Meanwhile, City Walk and Dubai Hills Estate both registered moderate increases of 12 percent,” said Gurrapu, adding that “This shift highlights the growing demand for value-driven investment opportunities in suburban areas, as buyers are being priced out of the central districts and seek alternatives in outer, suburban locations.”
In addition, some of the developers in Dubai have become aggressive in their payment plans as off-plan property demand continues to grow consistently. Such payment plans ensure timely delivery and completion of projects to buyers as construction material costs are rising due to demand and some developers find it challenging to get good contractors.
“The sustained high demand for off-plan properties prompted some developers to introduce aggressive payment plans, with structures reaching as high as 80/20 or 75/25. This trend is making homeownership through off-plan purchases more challenging for lower-income individuals and families, especially those looking for larger apartments or villas,” said Asteco, a Dubai-based real estate services firm.
Off-plan transactional activity also remained robust in the third quarter, with developments in desirable locations and from prominent developers often selling out within days or even hours. This strong performance is driven by a synergy of key factors such as brand reputation, desirable location, quality product offerings, competitive pricing and attractive payment plans.