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Coming to the end of the year, everyone is bound to look at the year that passed and what it did for them, goals achieved, goals missed and a new set of goals for the coming year. It is time to reflect as well as compile the learnings throughout the year.
The year 2015 was incredible in many senses. The market, being softer since the second half of 2014, posed new challenges to the developers and brokers, but at the same time brought about innovation.
I think we can easily summarise the main highlight of 2015 as being the start of an innovative culture and bringing about affordability to the otherwise ''only for the elite'' Dubai market. Below are a few of the game-changing points in the Dubai real estate market in 2015:
Post-completion payment plan
Although this is not new to Dubai real estate, the kind of both supply and success this format has enjoyed in 2015 has been a very fresh way of thinking and selling real estate. This has, at the right time, filled the vacuum left by banks not offering mortgage on under-construction properties. It unveiled to the market a large number of clients who are currently renting but have a desire to buy a property. Buying in cash is not what their resources allow. An extended payment plan beyond the handover goes a long way in getting them involved in buying to live or invest.
In January, Danube, with its 1% payment plan for Glitz 1, brought a saving plan mode when one buys a property. We saw a whole market new set of market open to that and several others came with innovative payment plans thereafter and throughout 2015.
Super-sized or smaller unit sizes
The year 2015 has seen the sizes of apartments either shrink or go super-size. Another gap in the market was well tapped and filled by both micro-sized and extra large apartments. Emaar came up with Downtown properties and made them more affordable by reducing the sizes. At the same time, super-sized apartments from a private developer saw great success in Downtown as it was a gap waiting to be filled. The $75 million apartment in the Palm Jumeirah is another example.
Pay as you live
Ready-to-occupy properties on payment plans, i.e. move now and pay as you live concept, hit the roads this year. Although it sounds similar to the first point, the main difference is that the switch from being a tenant to property owner is immediate with no overlap in payments. This could be a game changer in the Dubai property market. Although cracking the code is not easy, creating a win-win situation between the developer and buyer by selling a ready property on nominal downpayment while giving a three to four-year period to service the balance makes it an attractive proposition for someone with a downpayment and a good debt servicing capacity.
Markets outside UAE
Almost all developers, whether master developers or large private developers, are reaching out to the foreign market to generate interest and sell their inventory. But what is more important is that there is a clear case for Dubai as a great rental yield opportunity, but the buyer’s lack of information and knowledge never allows him to take the plunge.
The entire industry is making a huge effort in spreading the word about Dubai which will trigger an inflow of funds and help the economy grow. There are huge positive implications on the efforts being put by developers and brokers to educate the foreign market.
The lean fishing period has taught us how to cast and handle a bigger and more effective net. Now comes the fishing season that we will all be getting a better yield. Brace yourself for 2016 and the ride it beholds.
Source: Ashirwad Somani, Special to Freehold
The author is Director - Candour Real Estate