In a recent interview for a new property-dedicated print magazine, Sean McCauley, director – agency services at Astico Property Managements, hints a slight correction in Dubai’s property prices.
Q.: Do you think 2013 is going to be a really crazy year for the market as compared to the last four years?
A.: I think, if you look at the market year on year, then 2013 will be a very good year, but I wouldn’t look at it that way because we have been through a very difficult period in real estate. 2008 to 2012 was one of the worst times ever in the history of real estate, so using that as such a low base for comparison would not be appropriate. At the same token, you shouldn’t try and compare current performance with that of the period of 2003 to 2007, because that was the peak and we may never see those days ever again.
Overall, I think that 2013 will be good, however, I do think there will be a slight correction in pricing. What we are seeing now is an initial knee- jerk reaction to a positive market, which I think will settle slightly.
At the start of the slower for business summer season, the probability or real estate price correction in Dubai sounds very much possible. Recently, we observed a slight decrease in the rental prices in the Downtown Dubai. Meanwhile, owners who bought an apartment at The Residences in 2011 for 3 million Dhs, now are selling it for 7 million Dhs.
Elsewhere, in the Arabian Ranches total transactions dropper to 70 per month from 80 in 2012. Fresh and upcoming villa supply around the area have adverse impact on villa demand. Now, the ready for occupation villa developments along the Emirates road are plenty. Spacious properties are available for sale and for rent in the Falcon City Phase 1, while the construction of Falcon City Phase 2 progresses on fast pace.
Many of the villas available for sale are not completed up to high finishing standards, while the areas where they are located are not serviced by simple facilities such as supermarket, laundry, pharmacy etc., not to mention schools or health centres. Yet, the prices for this villas are high and increased significantly in recent months, despite that many villas remain unoccupied.
Altogether supply of new properties remains very strong in Dubai, while demand is mostly from retail investors and speculators with limited budgets. Still investors can find very flexible payment options, similar to rent to buy in a number of residential areas. This indicates that the demand is not that strong as it may seem.