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The Price Difference Between First and Second-Hand Off-Plan Homes in Dubai Gets Bigger

A lot of people who do market study have looked at the decisions people make in an economy that is connected to other economies. They have found that investors did not realise the unclear nature of the risk they were taking in their plan for easy wealth, even though Lehman(Lehman Brothers) liked using leverage.

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Dubai Housing

Real Estate

Contents

More Price Rise for Off-Plan Launches Conclusion

In a time of plenty, when "scarcity economics" is quickly losing its ability to explain things, it is easy to fall into new ways of thinking that go against the economics of market gravity. The new problem of the "Economist" calls the current real estate market a "super-cycle." The reasons given for this sound eerily similar to the famous claim made by the same magazine in the late 1990s that oil prices would always be in the single digits.

A popular company is trying to be 20/20 about the market, and it is easy to make fun of forecasters because most of their predictions have come true. However, we do know that for most of this year, there have been a number of signs that the Dubai real estate market has been bubbling. That even though sales of main off-plan homes have continued to go through the roof, the difference between what these homes went for in primary and secondary off-plan areas has grown.

This gap has grown in places like JLT, Dubai Harbour, Dubai Marina, Business Bay, and Arjan, and it has now reached the same size as the developer's fees, which also grew over the course of the year. This means that the real "price discovery" has happened in secondary off-plan sales, and buyers in secondary sales get the price breaks that developers offer.

In places like JLT, Arjan, and Business Bay, the gap has grown by more than 20%, which is a huge amount, especially when you think that it could be the broker bonuses. The payment plans have been another motivation. Even though they are very flexible, they have caused even more of these units to be put on the market (often under the label "distressed") as flippers try to get rid of their stock.

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More Price Rise for Off-Plan Launches

We should know that because these payment plans give developers more power, they can raise the prices they offer. As a result, prices in all areas, from Ras Al Khaimah to Business Bay, are being offered at a median of Dh3,000 to Dh3,500 per square foot, even though the land prices in these areas also change.

In each area, things move in their own way, but the high demand for off-plan homes at similar prices suggests that in the background, things are moving in a way that makes payment plans more attractive.

One thing that all of these analyses have in common is the beat of happiness getting stronger. Experts have taught investors that betting against Dubai and the UAE's relentless march can be painful. But it's also true that things have a mind of their own, and when they lose touch with economic basics, there is a different thing "mean reversion" that happens. This is also something we haven't seen yet in the current US capital market cycle, even though there are more bright red signs that show differences in prices. Even though interest rates have gone down, mortgage rates have not yet gone down in the real estate market.

This way of thinking is based on the idea that buyers should know how much money they are ready to risk and that "effortless wealth generation" is rarely easy. Without a doubt, the only thing buyers can learn is how to find holes in the system. And the fact that ready sales are still behind schedule is the good sign of two likely outcomes:

As buyers try to find the better deal, there will be a choice to move towards ready-to-move homes. At the same time, the price and number of off-plan sales will drop to the line that shows a price reduction.

Conclusion

The result will already be known by the time the media learns about this situation. The continuation of off-plan properties will increase the price gap followed by different demands of the customers. So if we look at the market of Dubai there is no longer a big price gap between off-plan and ready-to-live-in houses.