(MENAFN- Khaleej Times) All the action in the Dubai property sector is transpiring in the under-Dh1 million price market. Not only does this signify an effort by developers to tap the mid-income market segment but also the willingness of banks to finance more end-users.
According to GCP Properties, in terms of expected supply that has been announced, 37 per cent is below the Dh1,000 per square foot while 45 per cent of the property transactions conducted since 2015 have been below the Dh1 million mark.
"This suggests that there has not only been a definitive shift in the part of developers to cater to this latent demand, this shift has also met with success as Dubai moves its focus to cater to the more mid-income segment of the demand curve," says Hussain Alladin, head of research at GCP Properties.
In terms of new supply, a majority of off-plan units being launched is below Dh1 million, mostly apartments and townhouses.
Most off-plan transactions in this price range is concentrated in areas such as Dubai South, Al Furjan, Town Square, Jumeirah Village Circle, Jumeirah Village Triangle, MBR City, Akoya and Akoya Oxygen. Emaar, Dubai South, Azizi, Damac, Nshama and Danube are only some of the developers offering properties in this price point.
"The most popular off-plan transaction is a 1-bed in Dubai South with an average sale price of Dh583,000, followed very closely by a 2-bed in Dubai South with an average sale price of Dh860,000," informs Lynnette Abad, partner and head of Property Monitor.
The sub-Dh1 million mark is mostly made up of studios and one bedrooms, and to this extent, there is supply in more upscale areas such as Dubai Marina, Business Bay and Meydan. It is only when you look at two bedrooms and above, does the number of communities shrink.
Meanwhile, if you are looking to buy a ready property on the secondary market below Dh1 million, consider communities such as Discovery Gardens, International City, Dubai Sports City, Silicon Oasis, IMPZ, Dubai Investments Park, Al Khail Heights, Jumeirah Village and areas in Dubailand that include Liwan, Majan, Arjan and Dubai Residential Complex.
"The average apartment sale in Discovery Gardens is Dh706,000 for a 1-bed and Dh494,000 for a studio," adds Abad.
In areas such as Dubai Marina and Jumeirah Lakes Towers, there are a lot of ready units available below Dh1 million, according to Lewis Allsopp, CEO, Allsopp & Allsopp.
"There are also off-plan options on the Palm Jumeirah that you can buy for under Dh1 million as well as in Dubai Hills, Dubai Creek, Business Bay and JLT," he adds.
However, anecdotal evidence suggests that it is still mostly investors who are picking up homes below Dh1 million.
"The biggest challenge to date is for an end-user to come up with a 25 per cent down payment. If developers can create a scheme which caters to this group, whether it's through a rent-to-own option etc, they will capture a very large end-user market which has been yearning to purchase property in Dubai," observes Abad.
Although end-users are buying properties where the developer offers attractive payment plans, activity is expected to pick up considerably once the properties are handed over and buyers can get banks to finance 75 per cent of the purchase.
"The challenge has always been for end users to obtain financing. Banks have become more willing to provide financing, and this is reflected in the mortgage statistics. Mortgage transactions have risen from 20 per cent of overall activity in 2012 to more than 55 per cent in 2017. Nonetheless, demand will be even higher should financing conditions ease further," reckons Alladin.
Besides the down payment, end-users must also pay several processing fees during their property purchase.
"We're talking approximately 32 per cent of the property value, once we consider bank fees also. It's a lot of money for people to be able to save up
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Deepthi Nair I cover all things related to real estate in the UAE. Working as a print journalist in Dubai since 2008, I have reported on all the flashy new projects in town. Dubai's passion for setting new records continues to amaze me. I love to do stories that strike a chord with the average expatriate in the UAE. If you have any news related to your community or rents, you know who to get in touch with at Khaleej Times. When I am not working, I travel, catch up with friends, mall trawl, catch up on movies, explore new places in town or just unwind in a spa. Originally from India, I have been a journalist for more than 11 years. Language has been my forte right from school. That's me in a nutshell
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