Dubai property market analysts noticed a disturbing trend lately: the ads for property sales appear to contain offers to sell, mainly premium, apartments at a price below the original price set by developer. As a rule, such offers are made by those, who want to get out of the obligation to pay the remaining amount for the construction of yet unfinished housing.
In one of these cases an apartment in an unfinished housing complex in one of the most prestigious areas of Dubai was put on sale. The price for an apartment was 14% less than its original cost, which originally amounted to US $ 520,000. In another case, the seller of luxury apartments in Dubai Downtown was willing to budge 10% from the original price of US $ 480,000, set by developer at a launch.
Experts note, that the cause for such discounts is in unfulfilled hopes of potential property speculators, who intended to sell the property, purchased within the last 12-24 months, at a much higher price due to overall prices rise, but didn’t succeed. And now the best solution for them is to reduce losses by selling a house even at a lower price. Another major reason is US dollar strengthening all over the world, and the weakening of national currencies in markets outside Dubai, which significantly limited the potential foreign investors’ opportunities.
During the first half of 2015 a sharp reduction in number of sales transactions occurred in different segments of Dubai real estate market, sometimes reaching up to 50%. Therefore, for those who, for any reason, now don’t have enough resources to continue paying the cost of off-plan apartments, the only possibility to sell such housing is budging from the original price.
Market analysts warned that, with a large number of abovementioned offerings on the market, an unwanted "competition for discounts" may start, which could lead to a significant reduction in prices and could adversely affect developers.
But there is also a flip side to any argument. According to Ahmet Kayhan, CEO of the property sales tracker Reidin, “It is important to remember that while secondary market activity has slowed down, where there are perceived 'deals' on offer, they are quickly getting snapped up.
"It is important to note that Dubai is in the midst of a consolidation/correction mode and in many instances investors are bargain hunting given the city’s growth trajectory.”