Dubai: Developers in Dubai delivered less than half of the homes they had promised to do in 2017, and in a way ensuring that new supply will not be flooding the market in one go.
This is a tactic they had been using consistently to keep supply levels in check.
But last year, only 14,700 units were delivered as against the proposed 31,300, states the new UAE real estate update from JLL. This works out to a 47 per cent “materialisation rate” and a drop from the 52 per cent achieved in 2016, when 17,700 new homes were completed. (But in 2015, the completion rate was particularly bad, with only 8,400 units done out of the 25,100 units promised. That’s materialisation rate of 33 per cent.)
Even with the new supply, Dubai’s rents will remain under pressure. JLL reckons that apartment rents dropped by 12 per cent - and villas by 9 per cent - last year and could see a further softening.
At some point in the next three years, developers will have to ramp up their delivery game.
Offplan sales made up 60 per cent of overall property sales in Dubai, and with a majority of them having anticipated handover dates by 2020-21.
Buyers, meanwhile, can expect more incentives from developers this year. “This is because the VAT regulations on residential sales offers developers a zero-rate on all sales within three years of the completion of a project,” the report notes.
More supply is the case in Sharjah as well, where freehold projects are emerging out of the developer pipeline. “We are aware of announcements to construct around 30,000 additional residential units across Sharjah,” says the JLL report.
“However, as most of these projects have not yet announced details of their phasing, it is not possible to identify how many of these will be delivered over the next two years.”
On the sales side, average prices remained “largely unchanged” through 2017. But volumes are gaining with the launch of sales at new projects from Arada and Alef.
The new developments are clustered around the east, and will eventually end up the congestion experienced in the older residential locations on the western side.
The new areas include the University City and the industrial area within the Al Saja’a suburb, JLL reports. (Currently, 89 per cent of Sharjah’s existing stock are apartments.)
JLL estimates that Abu Dhabi recorded 3,000 residential handovers last year. A further 8,000 units apiece are expected in each of the next two years… in a best-case scenario.
But most of these will be on the “new islands”, made up of Saadiyat, Reem, Raha Beach and Yas.
In fact, handovers of the first homes on Yas started recently and should pick up pace this year. The new islands currently take up more than 60 per cent of projects under construction.
