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Why are Dubai buyers snapping up homes worth millions in record time?

Dubai’s strong economy, global recognition, government support for investments and infrastructure, and its appeal as a business and lifestyle hub are leading to rapid sell-out of real estate projects in the Emirates

Why are Dubai buyers snapping up homes worth millions in record time?

Several real estate projects in the city have been experiencing rapid sales, with properties selling out within days or even hours of their launch. For instance, Wasl sold all 600 units of Park Views Residences Tower A in just 36 hours, while Binghatti Properties’ Mercedes-Benz branded project saw 50% of its units sold out within a day. AHS Properties’ Casa Canal project also sold 80% of its units shortly after launch, and AMIS’ Woodland Residences project completely sold out within a week.

“Dubai’s diverse economic strengths and international recognition, along with government initiatives boosting investments and consumption, infrastructure development, and its unique appeal as a global business and lifestyle destination, are all contributing to the rapid sell-out of real estate projects in the emirate,” believes Ajay Barua, Client Manager at Betterhomes.

Abdullah Alajaji, Founder and CEO, Driven Properties also believes that the success of a project is influenced by several factors. “Firstly, the product itself, which includes aspects such as the architecture, design, and layout of the building. Secondly, the pricing and payment plan play a crucial role in driving sales, with a market-standard payment plan leading to faster sales. Lastly, the location of the project is also a key factor in determining its success, as being in a prime location can contribute to an outstanding outcome. When all these elements are in place, a top-tier product will be quickly snapped up by investors and residents in no time,” he explains.

What are buyers being drawn towards?

According to experts, buyers in Dubai’s real estate market are primarily seeking luxury apartments, villas, waterfront properties, gated master communities, and smart homes. And while everyone has their own unique preferences and needs when it comes to buying a home, there are certain amenities that homebuyers are unwilling to compromise upon. For example, outdoor spaces are a must-have for many apartment dwellers who want to unwind and enjoy some fresh air. Besides, as the trend towards healthy living is growing, people are looking for top-notch gym facilities in their homes. Many are seeking residences that allow them to break free from their sedentary lifestyles.

Park Views Residences by Wasl

“In the ultra-luxury segment, a highly sought-after amenity is a private pool on the balcony, a feature increasingly desired by luxury buyers. Additionally, multiple parking spaces are gaining importance in apartment complexes. With the rise of remote work, having an integrated business facility for comfortable work is crucial, and mixed-use projects catering to children are rising in popularity as well,” mentions Alajaji.

What strategies are developers employing for the quick sell-out of projects?

Barua believes that nowadays developers utilise a combination of marketing strategies, competitive incentives for agents, exclusivity, structured payment plans, and psychological triggers to create a sense of urgency and drive sales momentum in Dubai’s real estate market.

AHS Properties’ Casa Canal

Currently, developers are employing pre-sales tactics to create anticipation and buzz for unique products in the market. By engaging a small audience initially, momentum and demand for the product are gradually built up, leading to increased sales over time. This approach is heavily influenced by the prevailing market sentiment, with the aim to capture the attention of potential customers and drive sales success.

“Developers, especially smaller and private ones, are opting for payment plans that extend past handover to attract buyers. A recent example is Swiss developer DHG’s project Helvetia, which offered a two-year post-handover plan and saw success. Developers are also considering broker payments, aiming to provide a quality product at a fair price while also offering competitive commission rates,” explains Alajaji.

Is Dubai’s real estate market a bubble waiting to burst?

Market dynamics have shifted significantly over the past three to four years, indicating a heightened level of maturity. “Previously, fluctuations resembled index movements, where if JVC saw a 20% increase, Bulgari and Downtown followed suit with similar gains, almost like synchronised index movement. This trend was notable during the upward trajectory of 2012 and 2013. Today, we observe stark divergences. For example, properties such as Bulgari are tripling in value over a three to four-year span, while certain areas, like those near Dubailand, remain stagnant in price. This divergence signifies a mature market. Also, the rise in rental values paralleling sales prices indicates sustained and genuine demand, a promising indicator,” mentions Alajaji.

AMIS’ Woodland Residences

He continues, “Back in 2008, rental yields in Shoreline were less than three per cent net, highlighting a disparity between sales and rental prices. Contrastingly, today, rental yields have increased alongside rents, suggesting a more balanced market. Based on this, I’m confident that there’s no indication of a bubble forming whatsoever.”

Dubai’s prime real estate prices are significantly lower than those in Hong Kong and London. Moreover, the overall quality of life in Dubai is a key factor driving its popularity. While the market may be considered ‘hot’ in the short term, but it is not heading towards a bubble or another catastrophic crash, experts say.

Will the growth momentum continue?

Whilst it’s challenging to make precise predictions about the upcoming years of the Dubai property market, as of now, Dubai’s real estate market has shown resilience and recovery from previous downturns. “However, challenges such as affordability for genuine end-users looking to live in Dubai, along with external economic factors, persist. Continued monitoring of market fundamentals, policy developments, and global trends will be essential for assessing the outlook and potential risks facing the Dubai property market in the coming years,” believes Barua.

Helvetia Residences

Dubai aims to accommodate close to 8 million residents by 2040, necessitating ample housing options. “Despite uncertainties in various regions, Dubai’s liquidity remains high with capital coming in from places like China and Europe. The diverse global audience continues to be attracted to Dubai, keeping liquidity inflows strong. The resilient banking system in the UAE sets it apart from counterparts in the region, with bank fixed deposits lower than in Qatar or Saudi Arabia indicating a cash-rich market. The market’s strength is expected to lead to a stable and manageable growth trajectory in the future,” concludes Alajaji.