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Dubai: Land and property transactions across Dubai totalled Dh186.34 billion (through 33,907 deals) for the first nine months and are well in line to match the Dh218 billion recorded for 2014, according to latest data from the Land Department. These numbers will give some heart to realty market stakeholders as it was felt that the steep decline in activity in the freehold areas — where all nationalities can buy — would pull down the rest as well.
The official data suggests this need not be the case. Commercial land purchases had the dominant share of transactions in the first nine months, with Dh63.78 billion, followed by empty land bought for other purposes, which were worth Dh23 billion. Clearly, investors are committing sizeable funds to retain their exposures in real estate, a trend possibly linked with the demand projections in the lead-up to 2020 when Dubai hosts the Expo.
Meanwhile, in terms of property (both buildings and individual units), there were 21,686 transactions for a value of Dh32 billion.
“In light of the report’s findings, investors and developers can have realistic expectations and can formulate effective strategies in the short and medium-term,” said a statement issued by the Land Department. “The data in the report is far removed from fallacious information about the market that certain parties are trying to broadcast in order to achieve personal gain.”
It would be interesting to see whether the continuing softness in property values across Dubai’s freehold clusters will perk up investors to do more during the current quarter and help overall transactions go past the Dh218 billion in 2014.
According to research by the consultancy ValuStrat, compared with the second quarter, the transacted price for residential property in Dubai during the third quarter was down by an average of 5.6 per cent. (This is based on transactional activity garnered from 26 key freehold locations in Dubai and based on which the firm has set up a ‘residential index’.) “The median transacted apartment price stands at Dh1,008 per square feet, while the median for a villa was Dh1,068 per square foot,” according to the ValuStrat report. “Statistical analysis suggests that next year may witness a plateau in prices, indicating a buyer’s market with deals being encouraged as a result of price negotiation by vendors.”
Already, “Investor interest has increased for bargains and distressed sales.”
Fifteen off-plan projects were launched in the third quarter and would add another 30,000 units to the residential pipeline by 2025. “Twenty-seven per cent of this year’s residential projects with approximately 7,800 units are delayed and have been rescheduled for handover during the next two years, reflecting some construction slowdown in this sector,” said Haider Tuaima, Research Manager at ValuStrat. (By the firm’s reckoning, 18,000 apartment units would have been delivered this year plus 3,770 villas.) Within the freehold locations it monitors, ValuStrat estimates that apartment rentals were down by 4 per cent at the end of the first three quarters compared to the same period last year. On a quarterly basis, apartment asking rents are down “slightly by 1 per cent and villa asking rents fell by 4 per cent. However, overall residential rents were 1.6 per cent higher than the same period in 2013”.
Breaking down the Land Department numbers
Outright cash sales totalled 22,389 transactions and 42 per cent of the total land transactions. Mortgage-based deals made up 50 per cent.
Value of ‘commercial land’ deals was put at Dh63.78 billion, followed by ‘empty land for other purposes’ with Dh23 billion. In third place was ‘empty land for commercial purposes’ with Dh22.6 billion. ‘Empty land for residential purposes’ made up nearly Dh20 billion.
‘Land with residential buildings’ accounted for Dh17.5 billion, while ‘land for other purposes’ made up Dh6.2 billion.