Is Dubai’s reals estate sector making a dramatic transition to a seller’s market despite the lingering effects of the economic slowdown caused by the pandemic?
Property experts say they are witnessing such a shift with the ratio of buyer enquiries far exceeding the new supply.
'Ready properties of high-quality finishes that are kept well are in high demand and with so much competition from buyers at the moment, we are seeing undersupply issues leading to property price increases,' property consultancy company Allsopp & Allsopp notes.
According to Allsopp & Allsopp's data, current ratio of buyer enquiries to new property listings stands at 8:1, which proves that Dubai is in the midst of a seller's market.
'Buyers don’t have a lot of options in the market and urgency is being shown as prices are on the increase and have been doing so for the last few months. They are signing on the dotted line a lot quicker than they previously would have through fear of missing out on a property they like,' an analyst at Allsopp & Allsopp wrote in a report.
Lewis Allsopp, CEO of Allsopp & Allsopp, notes, 'If you go back a year-and-a-half, we were trying to convince buyers to look at properties as Dubai was in a buyers’ market. They weren’t keen to view as there was so much supply and with the supply comes less urgency. If a property they like was sold, they would simply find another similar property. However, we are now seeing multiple buyers for one property as there is little supply therefore creating urgency, and at times, driving the price upwards by means of outbidding each other'.
The company has a waiting list of buyers for certain properties, which means that those properties in high demand are selling before they reach various property portals.
'What we are seeing is that buyers are contacting agencies to find out what is becoming available. They are not waiting for properties to go live online. This is an encouraging sign for the Dubai property market and shows its maturity despite a global pandemic,' he said.
The company's revenue January 2021 was record-breaking compared to any other month in its 13-year history. The loan-to-value (LTV) ratio and low-interest rates are a common denominator when it comes to buyers having the ability to become homeowners.
'First-time buyers make up 74 per cent of our business at the moment due to the government stimulus package increasing the LTV and lowering interest rates - it has never been a more affordable time to buy,' says Allsopp.
For example, in 2019 a property could be worth USD 680,000 with a down payment of 33 percent at USD 217,000, while during the second half of 2020 and in the beginning of 2021, the same property could be purchased for USD 517,000 with a down payment of 26 percent at USD 108,000. Not only is it a lot cheaper, but clients are also paying less in upfront costs.