Dubai: Why are more people selling off-plan properties a year ahead of completion?
Dubai's property market has dominated off-plan sales in the form of one-year properties since, as per Shaikh, most investors are interested in off-plan properties as it offers the best return.
According to insiders, many end-users who originally bought off-plan units targeting to occupy these properties have also come into the market to sell, drawn by the high returns such assets are likely to fetch. Off-plan units remain the two key sources of market growth, commanding more than 50% of total sales in Dubai’s real estate as of 2024.
According to CBRE, the total volume of residential sales surpassed 125,000 in the first nine months of 2024, which represents more than a 36% increase compared to nearly 93,000 in the same period of 2023. Growth has been propelled by the increasing number of off-plan transactions which have seen more than a 50% increase year on year for this quarter and little to no drop in the activity levels for the launches of new sales.
‘ In this regard, most off-plan resales relate to properties that are scheduled for completion in less than 12 months. We know that many of these are owned by people who bought the property assuming they would occupy it after handover rather than elevate their market selling tenets in the future,” said Zhann Jochinke, chief operating officer, Property Monitor.
Lack of ready properties
Chairman of Allsopp and Allsopp's, Lewis Allsopp notes that there has been a total of 22,555 off-plan unit launches in the third quarter wa as a result of the developers continuing to try and meet the market’s requirements Wai Wahdan.
56.5% of the activity taken in Dubai’s market in off-plan sales was recorded in the third quarter while there was huge demand as well as lower characteristics for property sales Wai Wahdan.
The demand that met the supply shock in the market remains strong and this makes the off-plan properties astute investing opportunities especially at the time of construction or for foreign investors Allsopp.
Wahdan said this is in part caused by off-plan projects primarily attracting buyers because the prices for these new units and the payment plans are flexible compared to already completed buildings. Also, many people who buy the properties don’t live there during construction, so the value goes up and they can sell for more right after the project is done. Demand for quick returns is making the funds for the property increase rapidly for investors and so off-plan resales are also quite popular now because the investors are seeing that the value will go up and the timing is right.
Wahdan explained it in this way: When projects have reached completion and are off-plan, generally the value will be quite high as the off-plan property is available now for immediate occupancy و satisfaction because all relevant risks such as delay or quality of the project has been completely removed. And of course, this is all due to the increased demand which fastens the growth of the market.
“Additionally, this brings the value of such properties even higher, as they are in short supply. . . properties developed within a year of handing them over to the owner usually fetch a higher value as they are relatively new, appreciated in value and are in a habitable condition,” stated Allsopp.
No more flipping
Zhann Jochinke from Property Monitor dismissed the idea that a segment of investors is flipping properties and thereby escalating speculation in the market.
According to him, the environment for ‘quick flips’ that were speculated in the mid-2000’s is a thing of the past because of matured markets, better informed investors and self-imposed restraints by the developers.
“Speculative flipping has also been drastically reduced because of sales conditions put in place by developers: in some cases, over fifty percent of the total cost of the property must be paid before any transactions after the initial are permitted. Such policies are effective self regulators for the industry,” Jochinke said.
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