Dubai’s property industry is now a buyer’s market. It’s a far cry from the heady days of the property boom when sellers were calling the shots and getting a premium price.
Buyers are now after the most attractive projects. There is a reasonable demand for residential units in areas that have finished roads and basic facilities, such as shops and schools, according to property agents and consultants.
While some properties in prime locations such as the Arabian Ranches, Emirates Living, the Palm, Downtown Burj Khalifa and Dubai Marina are selling better, it can still be challenging to complete a sale.
“The main hassle or challenge is to find a buyer in a market where there’s a lot of competition,” says Craig Plumb, head of research at Jones Lang LaSalle, Middle East and North Africa.
“The main issue is how to package your property to make it the one that people want to buy, and price is obviously part of that. But there’s more to it than that.” Steve Morgan, head of Cluttons UAE agrees. “I believe oversupply can be a challenging factor, which is why most sellers must carefully consider preparing their property for sale to make it stand out from all the others. This, and a competitive price, is very important.”
Sellers must be realistic
Due to increased documentation and formalities, mortgaged properties could pose as a challenge for sellers, according to Shilpa Guruswamy, commercial and legal manager of Asteco Property Management. When it comes to prices, sellers have to be realistic, consultants say, but that depends on when the property was acquired. “In terms of an average, the prices are back to the level of the end of 2006 and the beginning of 2007 and, within that, it’s going to vary,” says Plumb.
“If you bought the average apartment at that price, you are probably back down to about the same price today,” Plumb says.
“But if you bought any time during later 2007 and 2008, then you are going to be selling at a loss.” The overall market has come down to 60 per cent from its peak, which would have been between June and September 2008. With buyers still driving prices down, the actual sale price depends on several factors, according to Morgan.
These include the motivation of the seller, how long the property has been on the market and whether the buyer needs finance or cash. And that could mean selling your property at a price lower than what you bought it for.
Properties are still being sold at a profit in areas such as Emirates Living and Palm Jumeirah, says Guruswamy. However, off-plan properties in areas such as Sports City and Jumeirah Village are slow moving. Buyers who invested during the peak period are finding it difficult to sell their properties at purchase price or above, she adds.
Plumb advises sellers to use a professional agent with a track record in this market for two reasons.
One is the amount of work required. You can sell the property privately, but it will involve a lot of running around. But the other reason for using an agent is that the seller traditionally gets a better price. “Evidence has tended to show that sales using an agent achieve a higher price than sales direct,” Plumb says.
“If you are not so concerned about getting a top price, do it yourself. But if you want to get a higher price, and you are time constrained, my advice would be to use an agent.”
A seller should take great care in selecting his agent, making sure that the company is registered with the Real Estate Regulatory Authority (Rera) and has a good reputation within the market, says Morgan.
“The seller should look to build a relationship with their agent and give them a time frame with which to sell, so the exclusive agent will work in a manner that is commensurate to the seller’s needs and interests which ultimately will lead to a successful sale,” he adds.