Dubai developers could switch focus from apartments to offices as an off-plan housing glut saps demand, according to a new report.
Reports from the property information company Reidin and the Unitas Consultancy has indicated a change of direction by developers in the run-up to the 2008 property crash. Back then several towers were changed from residential to office use. That created a glut of office space in the market that still persists despite increasing demand.
“Developers will begin to change course again towards the commercial segment in order to cater to the pent-up demand,” said the report.
The report says a “flurry” of off-plan units have been launched since the market began its recovery in 2012, which initially depressed sales of completed homes 26% year-on-year by sucking liquidity out of the market.
Since then, however, as more off-plan launches have taken place this trend has reversed, and recent off-plan sales have been conducted at a discount of about 20% to completed homes in an attempt to entice buyers.
Citing sales in Arabian Ranches as an example, the report’s author, Sameer Lakhani, who is managing director of Global Capital Partners, said that when the master developer Emaar Properties launched its Palma project in mid-2013 it did so at rates that were considerably higher than completed properties in the area.
“Subsequent launches were at significant discounts to the secondary [completed homes] market,” he said to The National.
The report notes that just 4% of the launches that have taken place over the past five years have been for commercial property, and there is a “pent-up demand” for such space as a result.