x Abu Dhabi, UAETuesday 23 January 2018

Sales on Palm Jumeirah show strong increase

Prices are also rising as property experts link resurgence to changes in the region.

Prices are also rising as property experts link resurgence to changes in the region.
Prices are also rising as property experts link resurgence to changes in the region.

Unrest in parts of the Middle East has helped to spark a surge in home sales on the Palm Jumeirah in Dubai.

The number of transactions on the Palm increased 87 per cent in the first half of this year compared with the same period a year ago, says Mark Towers, the managing director of Edwards and Towers, an estate agency specialising in the Palm.

Many of the buyers were Middle Easterners looking for a safe place to invest in light of the clashes that erupted in the region earlier this year, Mr Towers said.

"Suddenly we started to see more Saudi and GCC [customers] take an interest in buying second and third homes," he said.

Regional buyers account for 40 per cent of his company's sales on the Palm, up from 25 per cent in the past, he said. The so-called Arab Spring "was a pretty good catalyst to kick things off again", Mr Towers said.

The Palm and its distinctive fronds were an icon for Dubai during the property boom, illustrating the emirate's ambition and creativity. Later, the project became a symbol of the market's downturn as international media reports spotlighted empty streets and unsold homes.

Today, the Palm is routinely cited as one of the few areas in Dubai showing signs of a property recovery, along with villa projects such as Arabian Ranches.

Villas on the Palm "remain very popular as regional investment capital flows towards prime products", CB Richard Ellis said in a recent report.

Lease rates for villas in the Palm have increased 4 per cent in the past year, and rents for high-end apartments are up 5 per cent compared with double-digit drops in many other areas of the city, according to CBRE data.

A two-bedroom apartment on the Palm now rents for between Dh140,000 (US$38,000) and Dh180,000 a year , and a four-bedroom villa typically leases for between Dh330,000 and Dh380,000, CBRE reports.

Sales of villas on the Palm have been "robust" in recent months, says the property consultancy Cluttons.

"Ultimately, when it comes down to it, it is a very unique development globally," said Richard Paul, an associate director of Cluttons in the Middle East. "It is a world address."

There are still problems on the Palm, analysts note. Many of the amenities, including retail projects, have not been completed, and owners in some developments complain about high service fees.

Overall, prices for villas in the Palm still dropped 3 per cent in the second quarter from the first quarter, according to data from the property management company Asteco.

But that was still better than other villa projects in Dubai, which reported drops of 5 to 7 per cent.

Home values on the Palm differ tremendously according to location, views and floor plans, agents say. Although many Palm homes are on the market, not all meet the criteria of the current group of house hunters.

"What we've found is that certain types of buyers go for specific floor plans, so that immediately filters down the choices," Mr Towers said.

Prices for certain garden villas, which are generally about 5,000 square feet, have risen from Dh7.5 million to Dh9m since January, Mr Towers said. "Signature villas" of about 7,000 sq ft with popular floor plans now sell for about Dh22m, up from Dh18m in January.

"Supply is limited and demand is still there," Mr Towers said. Homes priced at "bank valuations" would sell in four to six weeks, he said.

The surge in activity has some sellers raising their prices, showing a level of confidence not seen since the property boom - even if it may be premature in today's market.

"Now we're starting to see the point where sellers are starting to increase prices excessively over what the valuations will hold," Mr Towers said.