Survey reveals positive sentiment in Dubai real estate market
People in Dubai are expecting the residential property market to recover in the next 12 months with this positive sentiment expected to attract more buyers, according to a new survey.
Some 50% are expecting the housing market to improve and those renting are keen to buy with 51% indicating so, the details of the Dubai residential market sentiment survey from international real estate firm Savills shows.
Of those tenants seeking to buy some 62% were leaning towards buying a home for their own use rather than buying to let, thus demonstrating further reinforcement towards ownership, consistent with the high yield levels in a majority of mainstream residential districts in Dubai.
The report highlights that of all tenants looking to move towards ownership, more than half were looking to purchase a property within the next 12 months, a trend in line with Savill’s previous forecast of the growing pool of buyers looking to enter the bottoming market.
Confirming the general optimism, only 17% were not planning to buy real estate in Dubai anytime in the future, while 32% were unsure.
Savills is expecting sales to rise with 58% of existing owners saying that they are likely to transact over the next 12 months and almost 46% are inclined to expand their existing residential portfolio.
As expected, Dubai Marina continues to hold its position of the most favoured residential district while Downtown came in second. Both these locations account for more than a quarter of all responses, clearly positioning their dominance on desirability despite or perhaps because of their current drop in sales prices.
Mid-segment villa communities such as The Springs, The Meadows and The Lakes emerged as the most sought after villa districts while newer suburban residential districts are yet to match interest levels with the established central residential submarkets.
Of all the factors hindering Dubai residents to buy, the single largest reason is the difficulty to secure finance with one in four reporting this as their main deterrent. Some 71% believe that mortgage regulations should be relaxed even when factoring in the detrimental effect of a possible return of speculative buyers.
Further analysing tenant responses, particularly those who were unsure or not interested to buy in Dubai, a prominent 30% reported difficulty in accessing mortgage finance, probably representing a substantial segment of tenants who are kept away from ownership by the current criteria and reinstating the fact that there exists a strong underlying demand of tenants who would consider transitioning to ownership if the mortgage regulations are relaxed, further highlighting the affordability issues faced by the mainstream market segment.
Despite much debate in the aftermath, a majority of 56% responses indicated Brexit to have had a neutral effect on Dubai’s real estate while 24% agreed that it would be bring about a positive impact compared to 21% expecting a negative outcome
Water front developments such as Dubai Water Canal and Dubai Creak Harbour were the preferred flagship developments which would shape the future of Dubai with 62% choosing them over other inland developments such as Dubai South and MBR City.
Overall 59% of survey participants perceived owning a property in Dubai to be advantageous despite the current market backdrop whilst a robust 71% of the owners holding properties in Dubai agreed to this statement and Savills says this reflects a sense of confidence in the real estate market.
‘Unsurprisingly in the context of softening prices seen in the past two years, the flight to quality towards core locations is translated in a positive market sentiment for the prime apartment locations of Downtown, Dubai Marina and the freehold segment of Jumeirah in addition to the villa districts of Palm Jumeirah and Emirates Hills,’ the report says.
‘On the flipside, areas such as Dubailand and Dubai South were perceived less likely to appreciate by participants. The issues of affordability and mortgage regulations continue to weigh down upon the buying intent of the mainstream tenants,’ it points out.
‘We expect progressive relaxation of the current mortgage regulations to provide relief to this large segment by particularly focusing on those who are buying to live thus keeping speculators away,’ it concludes.