The evidence of this can be seen in the figures for property sales. At the Palm, a one bed Marina Residence was valued at Dh1.62 million but was bought for Dh1.7 million resulting in a 5% gain for the seller.
Another example is Discovery Gardens, originally listed for Dh286,000 in January, however this month the property sold for Dh340,000, a 19% increase gained by the seller. A one-bedroom at the Emaar 6 tower valued at Dh1.73 million gained a 12 % increase with the property purchased for Dh1.95 million.
These are just some of many examples with the majority of properties receiving 5% or more increase from the beginning of the year. That leaves people with the question why has the final closing price for these properties been raised in such a short time?
Managing Director at Global Capital Partners, Sameer Lakhani comments,
The upgrades done helped firm up prices even in an extremely downbeat market. These could have been cosmetic upgrades done to the flooring for instance. But these seem to have helped the seller at a time when so many properties listed for selling in the secondary market have the same sort of upkeep or quality. Any seller who ditches the cookie-cutter approach is getting what he wants… at least the data suggests so.
He continues by adding,
As to who is buying and how, it’s a mix of cash and mortgage buying that’s happening. But it’s becoming clear that mortgage-based deals as a percentage of the overall have come down, with buyers opting for post-handover installments.
The upgrades come at additional costs, paired with the risk that the seller may fail to receive offers near the asking price, but many sellers believe the risk is worth it. This is due to the value add on making the property stand out in an overcrowded marketplace.
Opportunities for Value Buying
Another factor that contributes is the latest buying trends that see properties such as International City and Discovery Gardens gaining a lot of traction. Buyers are attracted by the thought that prices have potentially reached the bottom, which means this is an ideal time for people to start buying again.
At International City over the last 45 days or so, there’s been a spike in interest. There may be the odd distress sales happening at a lower price, but more buyers realise current rates are near the bottom,” said Sailesh Israni of Sun & Sand Developers. He added “Units at a good building can fetch Dh700-Dh750 a square foot based on net sellable area – I think that’s quite reasonable under the circumstances.