Dubai homeowners increasingly opt for second homes

An annual sentiment survey reveals that half of the existing owners of residential apartments in Dubai are considering buying another home.

Core Savills’ annual Residential Sentiment Survey released recentlystates that about 36 per cent of people who are planning to acquire a residential unit over the next 12 months already have a property in Dubai.

Off plan apartments (especially below the Dh2 million price point) largely remain popular amongst the investors, attracting double more buyers in this group (65 per cent), as end users (35 per cent). Some builders, tried to flip this trend and increase the ratio of end-users amongst the total number of buyers as said by the report.

It has subjected to attractive payment plans that have come up over the past 12 months, demonstrating willingness to make their products popular to more end-user buyers. However the effort is welcomed by the market with 64 per cent believing that attractive payment plans will motivate buyers to opt for off-peak properties.

About 34 per cent of respondents who participated in the survey believe that Dubai’s real estate field has shown enough signs of recovery. Though, eight out of 10 of the respondents, who have disagreed on visible recovery, believe that Dubai’s residential market will be over supplied by 2020.

Apparently, one reason for the lowering of the rents could be the upsurge of more middle class in UAE who wants to have their own apartments because the rental fees is approximately ten per cent of value of the rental property, says the experts.

The report also pointed out that there has been over 40-50 per cent lagging in the past five to six years between the number of launched and delivered units. Actually, nearly about 15,000-18,000 units are delivered every year, which makesup only three to four per cent to the existing stock- albeit, more or less moderate number to be absorbed, even in the current  economic condition of the market, and not a single cause of extensive concern as known by the market. This clearly shows a discrepancy between market reality and perceived sentiment,” said anexpert in the report.

This parallel between sentiment and reality is supported by the fact that 20 per cent of the potential buyers below the Dh1 million marks consider lack of knowledge that keeps them away. These factors will increase the fear to take a “leap of faith” for many first-time buyers in their decision toown a property in Dubai, evenwith much convincing signs of maturity, stability, and added depth to the market since 2011.

Accordingto the survey, although 80 per cent of tenants chose to stay in their existing homes, only 26 per cent of them have seen a decrease in their rent, while 58 per cent renewed under the same circumstances.

Another interesting thing found is that when asked to rank the most important parameters in one’s buying decision, budget ledthe way first by far and 80 per cent choose this fact as one of their most important criteria; one potential buyer out of two even considers this to be the most significant parameter. This helps us to decipher the sentiment of a market still widely price-driven, with location and developer reputation being far behind in buyers’ priority list.