MENA Properties Services: Q3 Market Summary

DUBAI, UAE, November 10, 2014 /PRNewswire/ --

Whilst Q3 has witnessed a continued slowdown in sales transactions, the results of the past two quarters' slowdown and type specific corrections have now allowed international property investors to re-explore investments in Dubai's real estate as the market is demonstrating signs of maturity. The slowdown has been welcomed by these investors and end users (both buyers and sellers), as they see more solidity and clarity in the overall real estate market.  MENA Properties (MPS), a Dubai based real estate firm has marked an increased interest in Dubai properties from - end users in the Indian Sub-Continent, followed by the US and the UK.

Sales prices have overall remained flat with pockets of "anxiety sales" appearing; MPS believes this is due to investors who are over exposed and wishing to restructure their investments and finances.  MPS emphasizes that there will be no "crash" but a continued correction over Q4 leading to a more sustainable real estate market in Dubai. It also continues to recognize interest in apartments between AED 600,000 to AED 1.5m and between AED 3.5m and AED 5m, in the villa communities, both in main stretch Dubai and suburban communities. Also, there has been a considerable interest in commercial investments and interest in office space primarily in the Jumeirah Lake Towers area and MPS has seen a 10% increase in enquiries for investment opportunities with investors looking to achieve at least 8% net.

Both end users and first time investors are keen to step up on the property ladder and are reducing their initial appetite to a more achievable investment with plans to benefit from capital appreciation over 12 to 24 months and upgrade accordingly. However, the mortgage deposit amount of 25% still remains challenging and MPS believes that "rent to own" schemes as well as extended payment plans must be considered.

Interest in the rental market maintained its strength as more transactions occurred in affordable suburban locations.  MPS anticipates vacancy rates to increase in primary locations by the end of Q4 thus creating a shift back to these areas in the first half of 2015 as prices will begin to be more affordable again due to increased vacancies.

The reduced amount of Off Plan project launches in Q2 has continued into Q3 which is welcomed by MPS.  Most developers during Cityscape were seemingly focusing on existing project sales as well as announcing new projects but without selling the same. Nonetheless, the exhibition was considered as successful and significant in its delivery of consumer confidence based on progress with existing projects and the long term announcements of future developments.

MPS believes the overall movements in Q3 are once again healthy for the real estate market as they create a pricing equilibrium across Dubai. This year, according to RERA, 570 new brokerage companies were set up bringing the number of agents to around 5021. Accordingly, MPS suggests mandatory refresher courses for existing brokers as to consistently improve the quality of agents in the market, and either a freeze on new agents entering the industry, or a higher entry grade requirement for new potential Real Estate agents as to avoid a market saturated by "average brokers".

All in all, order is being restored and the market is definitely witnessing restructuring with capped mortgages, increased transfer fees and reduced launches. The movement has benefited less established areas, but as prices soften on the main stretch, there will be a partial shift back to this area leaving both established and non-established communities with healthier supply and prices.  The fear of overinflated prices in the suburbs due to the shift will be balanced by the pricing equilibrium and hence contribute to the overall consistency of the market.

MENA Properties is an independent sales and brokerage company for residential and commercial properties in the primary and secondary markets of the UAE, incorporated under UAE law and regulated by Dubai Government legislation.

If you have any comments / questions or require any further information, please contact us at info@mena-properties.com  or call us at +971-43889963.

Michael Michael (Managing Partner, MENA Properties Services)