The total number of off-plan transactions in Dubai during the third quarter has increased by 86 per cent compared to the previous quarter, while the value of these transactions rose 118 per cent to hit Dh4.04 billion ($1.09 billion), said Chestertons Mena, a leading international property consultancy.
The most popular area in Dubai was Dubai South with a total of 1,151 transactions, closely followed by Downtown Dubai with 821 transactions and Business Bay with 686, stated the report.
The Downtown commanded 50 per cent of the overall total value of off-plan sales in Q3.
Consequently, the increased interest in off-plan units had a continued negative impact on completed units where an 11 per cent decrease in transaction volumes and a 19 per cent in values was witnessed.
"With reference to off-plan transactions, Dubai’s real estate market has witnessed seasonal peaks and troughs in the last year due to high levels of uncertainty," remarked Ivana Gazivoda Vucinic, the head of Advisory and Research, Chestertons Mena.
"After a promising start to 2017, sales plummeted during a disappointing Q2 however they have picked up positive momentum in Q3," she stated.
“In Q4, we expect to see further corrections of sales prices and rents. A slight pick-up of completed unit transactions is expected, this will however have a negative impact on off-plan sales transactions which we expect to decline and then stabilise,” said Vucinic.
Overall, apartment sales prices have continued to decline during the third quarter of 2017 witnessing a drop of two per cent, thus prolonging the downward trend witnessed during the Summer.
This could potentially trigger further declines in completed unit values, as investors shift more and more towards off-plan property opportunities offering convenient payment options such as five-year post-handover or one per cent payment per month.
Interestingly, prices varied significantly from community to community within the apartment market with Dubai Silicon Oasis declining 9 per cent to Dh829 per sq ft whereas The Greens actually witnessed growth of 13 per cent to Dh1,352 per sq ft, by far the best performing area in Q3.
Dubai Marina was the only other location to witness an increase of two per cent, average sales prices in the area are now Dh1,470 per sq ft.
Apartment rental values fell further in the third quarter after additional stock entered the market leading to a three per cent decline. Discovery Gardens, Dubai Marina and Jumeirah Village Circle, on average, witnessed declines of five per cent. In was only The Greens that once again remained on par with the previous quarter.
“We have seen a two per cent decline for studios and a three per cent decline for one, two, three-bedroom apartment units. Studios have been relatively resilient this year and performed better throughout the year when compared to larger apartments, the same is true of the villa market. Two and three-bedroom villas are performing better than larger configurations,” added Vucinic.
According to her, villa sales prices have been more resilient due to the higher level of corrections during the previous quarters. The Meadows and Springs were the worst affected areas, both recording a 7 per cent decline.
Villa prices in Arabian Ranches fell by three per cent to Dh1,010 per sq ft. Palm Jumeriah prices are currently averaging Dh2,534sq ft; Jumeriah Park Dh1,136 per sq ft; The Lakes Dh1,348 per sq ft The Meadows and Springs Dh1,039 per sq ft; and Victory Heights Dh1,105 per sq ft, remarked Vucinic.
In the villa rental market, three-bedroom units witnessed a modest four per cent increase during Q3, while other sized units declined by two per cent (two-bedrooms), three per cent (four-bedrooms), and one per cent (five-bedrooms).
"To stimulate demand, we are increasingly seeing landlords now offering more favorable rental plans, these include up to 12 cheques and even rent-free periods as an incentive to lease properties," she added.