After a year where developers reigned over the market with aggressive payment plans and other incentives for off-plan properties, individual sellers on the secondary market have finally come into their own this year. With developers having exhausted all off-plan incentives and off-plan launches being scaled back significantly compared to 2017, Dubai’s secondary market is performing better this year. More end-users are now purchasing properties and they are keen to buy a finished product.
New payment plans are not really affecting secondary market sellers as buyers can take bank loans. What this means is they are making monthly payments, but they’re in the property and can see what they’re getting. Sellers aren’t necessarily reducing prices because of the intensive promotions and payment plans given to off-plan buyers
says Hadi Hajinia, sales manager at Espace Real Estate
Some sellers will decide to wait things out in anticipation of the market improving. However, it all comes down to each individual homeowner and their situation.
“Those who have the urge and the need to get out of the market will have to compromise on prices. Those who have to get out because they don’t have the final payment will also have to compromise on prices. You have to keep in mind that developers’ offerings are for the slow-moving properties. So, if someone bought a very good unit earlier, they seem to be able to still compete with the developer or have an edge over the developer’s stock because while the developers are offering great payment plans, these investors still have the unique unit or better offerings in terms of unit specifications,” explains Firas Al Msaddi, CEO of fäm Properties.
For those looking to sell now, it is imperative that they do everything they can to show their property in the best possible light. “Speak to your real estate agent and conduct due diligence to make sure you are bringing the property to the market at the correct price level. To make sure your property is being shown in the best possible light, make sure you’re decluttering, painting, tidying the garden, varnishing the doors [often doors will fade due to the heat and sun over here], etc,” comments Lewis Allsopp, CEO of Allsopp & Allsopp.
Although some sellers on the secondary market are offering incentives such as furniture package or white goods package, the biggest incentive will always be competitive prices.
“The prices have been reducing across the secondary market over the last four years, but this isn’t necessarily to compete with off-plan developments but because of the mortgage caps put in place by banks and the increase in transfer fees by the Dubai Land Department, both of which were necessary to bring in at the end of 2013 as the market was threatening to increase on value rapidly with the real danger of another bubble forming,” reckons Allsopp.
Al Msaddi suggests people to buy in developments that does not have a massive amount of similar range of properties because they are going to end up competing with the developer, which is very difficult to do so especially if the market is slow.
Communities that are about to be handed over where investors have to make the final payment has resulted in a wave of very well-priced units which is a great hunt for end-users. A good example for this could be Citywalk, Bluewaters and Bvlgari.
The secondary market is always good as end-users can move in or relocate quickly. They want to see the physical product and a lot of the end-users don’t trust off-plan properties, especially those who have been in the region for a while and may have seen or personally been a victim of failure to hand over on time and quality standards, etc. Secondary market communities such as Emirates Living, Arabian Ranches, Jumeirah Beach Residence and Dubai Marina will always perform very well
The off-plan market is still buoyant, especially from trusted developers such as Meeras and Emaar, in new locations and with inviting payment plans.
“The typical profile of a buyer at the moment is someone who is renting and looking to step onto the Dubai property market or upsizing or downsizing their property. Around 75 to 80 per cent of buyers are taking finance which suggests they are end-users rather than investors. What we find with this profile of buyer is that they like to see the finished project before they make the decision to buy,” observes Allsopp.
Developers have also started offering incentives for ready properties in a bid to clear unsold stock.
The ready market incentives in, for example, communities such as Arabian Ranches 2, is helping a lot of end-users who had difficulties buying due to financial obstacles or the lack of down payment in order to secure a mortgage from the bank. So, this incentive offers them the financial freedom to buy something and move in the same day but with a much lower up-front investment
Another reason why end-users prefer secondary market properties is because while off-plan payment requires a minimum of 30 per cent cash during the construction stage, if a buyer was to buy a secondary property with a mortgage, the down payment is only 25 per cent. The usual target audience for off-plan are customers who already have a property they’re living in and their motive may be for investment or to upgrade to a bigger property.