13 December 2023, Gulf News
Coveted plots in Dubai Marina or the Palm aren’t the only deals investors can get through an auction – buyers will find they can even end up owning upscale homes at a fairly steep discount to their prices in the secondary market.
Just recently, a two-bedroom unit at The Springs sold for a shade over Dh1.9 million, and well below the Dh2.3 million to Dh2.5 million similar units at the same location fetch in one of Dubai’s legacy freehold communities. Needless to say, this and other such listings were snapped up instantly at the auction.
There was also a Dh18 million sale of a Palm Jumeirah home, that in the secondary market would have sold for Dh20 million and above.
“On the auctions, such sales on ready homes are being finalized at a good 20-25 per cent lower than prevailing market prices,” said an estate agent. “You need to get lucky for the right choice of property to come in at a better than expected asking price.
“But these are happening more regularly, typically repossessed properties after the owners failed to meet mortgage payments. The sellers, which are the banks that have lent the mortgages, are willing to exit now because property values in Dubai have shot up so much in 3 years.”
At current high interest rates, there could be other property owners facing payment issues on their homes, and who would want to bail out. Or their banks will make those decisions for them. October and November saw a steady inflow of such listings on the auction platform, and to be met with immediate buyer interest.
So, investors and potential end-user buyers need to be keeping an eye out for such possibilities, if they want to acquire a property at a bargain. Because in the current property market cycle, these are indeed bargains.
Are auctions the only way?
For potential buyers concerned about prices and mortgage rates, the current Dubai real estate market is starting to offer options. Developers realise they cannot just focus on cash ready buyers or keep thinking of selling luxury homes to buyers who are not going to nitpick about prices.
“Generous payment plans are being offered by major developers for newer launches in new communities that are sprouting up in Dubai,” said Florin Rusu, a real estate consultant in Dubai.
“This allows investors the flexibility in the apartment and townhouse segments. In luxury, we have not seen post-handover payment plans as yet – and that’s why many developers continue to focus on that.
“But for investors and end-users in the mid income segment, they now have plenty of payment flexibility.”
How is this flexibility happening?
For one, there are more 8-year payment plans coming through for recent launches, including units at the Expo City, with apartment prices starting from Dh1.4 million. On the townhouses, the payment period is 5 years for homes priced from Dh3.8 million.
“Expo City is garnering a lot of buyer attention, including from end-users, who feel that price build ups are yet to start at this emerging destination,” said an estate agent.
“But 8 and 10-year payment schemes will become the norm in the mid-market offplan soon. There are only a handful of master-developers who can still afford not having any post-handover plans.”