The Dubai Land Department reports that while sales may be increasing the size of those properties sold are shrinking. The first six months of 2012 saw a 24.5% jump over last year’s numbers from the same period, but the size of the units shrunk by half and contributed to a drop in sales prices of 23%. The report also indicates a significant drop in mortgage lending as more buyers opt to purchase their real estate in cash. Experts predict that purchases throughout the rest of the year will remain positive although more subdued if market activity follows historical seasonal trends. For more on this continue reading the following article from Property Wire.
The number of real estate transactions in the first six months of 2012 in Dubai increased by 24.5% year on year to 12,521, according to the latest figures from the Dubai Land Department.
But the average size of properties bought in Dubai shrank by nearly half and average sales prices were down by 23%.
The average size of properties purchased shrank from 533 square meters in the first half of 2011 to 294 square meters this year, a drop of 44.8% and average sales prices fell from AED2.82 million to AED2.14 million.
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‘I believe that this is due to buyers investing in smaller units, so the asking prices are going to be obviously smaller. We are seeing evidence of this in the level of enquiries going up for one to two bedrooms as opposed to three to four bedrooms,’ said Mario Volpi, head of sales and leasing for UAE residential at Cluttons real estate agency.
Data also showed that the number of mortgage transactions fell by 23% to 2,903 during the same period, showing over three quarters of buyers are shunning lenders and opting to buy with cash.
‘This region has always been cash rich, so I do see a large growth in the future in terms of activity as more and more banks produce attractive deals to entice buyers to take out mortgages,’ Volpi said.
According to Matthew Green, head of research and consultancy at CBRE, the residential transaction market is likely to maintain its positive footing during the course of the year.
‘However, transaction volumes are expected to be more constrained as compared to the first two quarters, due to the slower pace of the summer and festive period of Ramadan wherein historically the markets remain more subdued,’ he added.
This article was republished with permission from Property Wire.