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Property buyers in Dubai are chasing value at those locations where they see that asking prices have yet to go through artificially induced spikes.
This is why residential communities such as Jumeirah Village, Dubai Sports City and Dubai Silicon Oasis are attracting a lot of interest as compared to a Downtown Dubai or a Dubai Marina. This search for affordability ensured that the former recorded higher growth rates of around 10 per cent in the second quarter, states a new report from Asteco tracking the period between April to June.
Mid-tier locations such as Discovery Gardens and International City recorded price increases of ''only'' 4 and 3 per cent growth respectively in Q2-2014. However, ''any further growth in these communities will position them outside the affordable range, and consequently lead to a reduction in buyer interest''.
As for the premium locations, ''Many sellers having raised their prices following the Expo 2020 announcement have no intention of reducing their asking prices until buyers match their expectations,'' the Asteco report says. In such a situation, it boils down to who blinks first — the buyer who does not want to pay an exaggerated premium or the seller who holds the view that is pricing is what the marketplace can sustain.
''This has led to a reduction in transaction levels, especially for higher priced properties within established communities,'' the report says.
Even across the board, sales transactions are still on the slower side, which is giving Dubai's property market a breather from getting into highly inflated territory. ''Similar to the first quarter, Q2-2014 witnessed marginal growth with sales prices up 6 and 3 per cent for selected apartment and villa developments respectively, as the market continued to absorb the rapid growth witnessed in 2013,'' the report added.
According to Niraj Masand, partner at Banke M. E., ''The lull in transactions has nothing much to do with liquidity, there's still plenty of that floating around. The problem has to do with sentiments — buyers want to be assured they are not getting sucked into a deal where the asking price is way too high to be justified. Plus, the Ramadan period has also contributed to lower buying activity.
''Some of the slowness in the marketplace for the established communities also has to do with a lot of off-plan projects being launched simultaneously — it's giving buyers pause for thought as to where to invest. Come August and September, the sales side of the market will pick. Latent demand is there.''
The Asteco report also reckons that post-summer would be the time for potential buyers to renew their interest in the market, ''The post summer months together with Cityscape are likely to see several new project announcements that will test demand in the market, giving buyers new opportunities to invest.''
Source: Manoj Nair, Associate Editor, gulfnews.com