People working in the property market are saying that sales of attractively priced houses in Dubai slowed in the past six years as a percentage of total transactions in reaction to changing developer tastes and broader rise in the cost-of-living.
For the last few years the sales and making of luxurious properties have risen by a huge percentage and these properties are purchased by the people who are rich.
Third quarter of 2018 saw 46 percent of all home purchases in the emirate peak properties below AED 1 million ($272,000). Some studies from the real estate companies provided showed that that number has been declining gradually since, bottoming out in the third quarter of this year. Sales of properties between AED 1 million and AED 3 million in the property market of Dubai, climbed from 39 percent of all transactions in Q3 2018 to 49 percent at the end of September.
According to the professionals in Dubai Housing, several developers who have enjoyed profits in the affordable housing sector have turned their interest to the upper market groups in order to grow, and boost their brand. Brokers working in the property market are seeing that developers have found out that making mid-size or mid-high types of houses in popular and attractive locations yields high profits. Among the companies that have changed their tastes in the property market of Dubai are Danube and Binghatti.
Danube started a 101-storey tower in Business Bay where the studios will start at AED1.2 million in January. Eighty percent of the Danube Bayz 101 high-rise remaining under construction by the end of September had been sold in good numbers. Through partnership with the luxury vehicle makers Bugatti and Mercedes-Benz and the wristwatch Jacob&Co, Binghatti has been providing the branded residence and its million-dollar costs that have grabbed a number of customers from other countries.
Two other things have been rising property prices and the lowering of choices available to less-income customers. Although in some cases mortgages are less than rent, several in this group find it difficult to qualify for mortgages given their financial situation. Consumers have been affected by increasing housing costs as the emirate's increasingly less available undeveloped sites become more expensive.
For example, land in the Dubai Canal area that was selling for AED400 per sq ft before is now up to AED2,000 per sq feet. Seeing developers moving from mid-market property to high-cost, branded homes, landowners increase their rates.
Some brokers claim that this is new to Dubai and also affects smaller villa plots which were once well priced in locations like Jumeirah Village Circle, Al Furjan and Maritime City. Rich people from other countries have put out the situation by drawing a rising audience for luxury projects. While the average size of homes sold was at a record low of 1,450 sq ft, it was found that in August this year the average price for housing properties in Dubai was at a high side of AED1, 490 per sq ft.
Normally the working class in Dubai is not being pushed out because of a lack of affordable housing, but rather because of the broader rising cost of living in Dubai. An Emirati lawyer Habib Al Mulla acknowledged in an interview said that some people are leaving the city because of the ridiculously high school fees and government taxes are also increasing. The landlords from this year are charging more rents for the properties. It makes it very difficult to bring them back again and the city drawing millionaires is not sufficient because it is important to have a middle-class in order to grow.
According to some information, several developers are still working on making attractively priced properties in new Dubai locations like Dubailand, Al Yufrah 1, Dubai Investments Park, Jebel Ali Industrial Area and Dubai South. Together this should result in several more reasonably priced housing properties. Part of their new Real Estate Strategy 2033, which was presented earlier this month of 2024, Dubai officials are expected to solve the problem of cheap housing.
The price of the properties in Dubai has increased but some professionals have also noticed that the builders are now more interested in making costly properties in Dubai. The rich people are now coming to Dubai in big numbers who are interested in luxurious houses only and builders are trying to grab this opportunity but not all is lost and there are some few developers who are still providing attractively priced luxury properties in Dubai.
