Property prices for luxury apartments in the Burj Khalifa, the world’s tallest tower, have fallen to as low as AED2,100 per sq ft, real estate experts have told Arabian Business.
High service charges coupled with distressed sales are being cited as the reason for the drop.
“I am telling [my investors] to buy; AED2,000 per sq ft is a steal. I have been offered one [apartment] for AED2,100 and a second one next door for AED2,500,” said Manoj Prasad, CEO and managing director of the Dubai-based Signature Group.
“I am even telling my family to invest. When it launched, it was a dream to have an apartment in the Burj Khalifa but that was for AED7,000 per sq ft and was not at a price that my investors wanted to invest. For my investors AED2,000 is a distressed buy,” he added.
Owners are currently marketing apartments in the luxury tower for around AED3,200 per sq ft but will likely accept an offer of AED2,930, said Samantha Liborwich of Dubai-based real estate agent Allsopp & Allsopp.
“There is always going to be somebody that says I’ll take it off your hands now for AED2,800 – they’ll be investors in the market that don’t really need to buy but they know if they do, they would be able to resell it,” she said.
Unveiled at the height of Dubai’s property boom, the world’s tallest tower was inaugurated in January 2010 with a glittering water and fireworks display. Developer Emaar sold 90 percent of the tower’s 900 apartments ahead of its launch.
The 828m-tall Burj Khalifa also includes 144 Armani-branded residences, 37 floors of office space and the 160-room Armani Hotel.
But the luxury tower saw rental prices slump in the wake of a global financial crisis that saw house prices in Dubai more than halve in a matter of months. Nine months after its launch, the cost of renting a studio flat had plunged 40 percent to AED6,666 ($1,815) per month, while one-bedroom apartments were on offer at AED10,000. An estimated 825 of the tower’s 900 apartments were vacant.
The cheapest property in the Burj Khalifa currently listed on website, PropertyFinder.ae, is a 519 sq ft apartment for AED1.27m or AED2,456 per sq ft.
Owners of apartments at Burj Khalifa pay an annual service charge of AED55.12 per square foot for chiller charges and maintenance of communal areas compared to AED21.50 in Emaar’s Residences in Downtown Dubai, said Ben Holiday of Dubai-based Brix Property Partners.
“Prices have dropped simply due to the fact that the service charges in the building are so high. The services charges are eating into a lot of the yield that landlords are gaining so it’s a big issue for them. A lot of the landlords now want to sell because of that very reason,” he said.