Residential prices for Emaar Properties's signature Downtown Burj Dubai development have fallen by at least 22 per cent, with reductions of up to 50 per cent within the Burj Dubai tower itself, according to property brokers.
Some high-end developments in Abu Dhabi are also recording significant price declines in the secondary market, where properties change hands after being sold by the developer.
The price corrections underscore how the credit crunch and prospects of a global recession are affecting the property market, particularly high-end developments.
According to statistics from the international estate agents Hamptons, which is owned by Emaar, prices in the Downtown Burj Dubai area rose 88 per cent in the year to September. Other brokers said some prices more than doubled.
"This is indicative of the whole marketplace," said Vincent Easton, the head of sales at Sherwoods property agency in Dubai. "Downtown [Burj Dubai] had quite a sharp spike in pricing. Anything that has a sharp spike is open to a correction if the market slows. Really, ultimately we will see the correct level."
Sherwoods, which closely monitors transactions at the development, said it had observed an average decline of 22 per cent, excluding the Burj Dubai tower. Prices in the tower - scheduled to become the tallest in the world - increased the most, and have subsequently fallen sharply. Prices outside the tower fell from an average of Dh3,500 (US$952) per square foot to Dh2,700, Sherwoods said. "When you exclude Burj Dubai from the area, you get a more realistic idea of the decline in the development," said a market research officer at Sherwoods. Flats on 8 Boulevard Walk, for instance, dropped from Dh3,300 per sq ft to Dh2,500 per sq ft in three weeks - a 24 per cent decrease.
Sujeeva De Silva, another Dubai-based property consultant, said prices in the Old Town quarter of the development had fallen 30 per cent in the past month, along with nearly 20 per cent at the South Ridges and Residences areas.
Price fluctuations in the Burj Dubai tower had been far more volatile because of the high percentage of speculators owning the properties, brokers said. Some had since been sold at significant losses to generate cash, they added. The most expensive floors, such as those branded by Armani, sold at about Dh14,000 per sq ft and were holding much of their value.
"Burj Dubai area was supposed to be the hottest and highest selling area. Now things have changed. The owners over there are in distress. They are desperate to sell with zero premiums, or minus premiums," said Juned Ali, a senior property consultant at Alamfa Real Estate. Mr Ali said that many short-term investors feared they would forfeit on looming payment deadlines.
Parthasarthi Reddy, the client relations manager at Zagy Properties, a brokerage firm based in Dubai, said the prices of units in Downtown Burj Dubai had suffered the biggest drops in the city so far. Emaar declined to make a spokesman available to comment on the Burj Dubai project.
Downtown Burj Dubai is Emaar's flagship project, a mixed-use urban development that includes high-end residential properties, office space and retail. The centrepiece of the area that will spread across 200 hectares is the iconic Burj Dubai, due for completion next year. The project is close to the Dubai International Financial Centre and includes Dubai Mall - one of the largest shopping malls in the world - which opened earlier this month.
"Once Burj Dubai is completed, the inner circle of 25km in the emirate will be one of the dearest residential areas in the world," Dirk Sassen, a shareholder in the German property investment fund ICT, said in June.
Abu Dhabi's high-end developments have also been affected. As is the case in Dubai, properties in projects that drew the most attention from speculators last year have recorded the most pronounced declines. Brokers said that many of the buyers appeared to have no intention of holding on to the property long enough to make the first required payments to keep possession of it.
"Al Reem Island has seen quite a harsh reality check, because that was a real speculative market," Mr Easton said. "You had actually 95 per cent speculators who had no intention of doing further payments. Residential properties in some cases [are now put into the market] at minus 15 per cent premium."
According to Susan Cronin, the general manager of Aljar Properties, a broker based in Abu Dhabi, only prices involving bulk deals have decreased. "A floor of offices that was offered in Al Shams Abu Dhabi at Dh2,500 per sq ft three weeks ago is now being offered at Dh2,100," she said.
Investors who bought properties on Reem Island at up to Dh2,700 per sq ft during Cityscape in May are expected to be the hardest hit if they intend to resell now. "Someone who is looking to exit today will have no choice than resell at around Dh1,800 per sq ft," Mr Easton said. "The best thing people should do if they can is to hold."
"Burj Dubai is an amazing area, but it will take a little more time [to make money]. You should have a capacity to hold on to it. This is not the seller's market any more. It has become the buyer's market now," Mr Ali said.
ngillet@thenational.ae
* Additional reporting by Sarmad Khan
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
MATCH INFO
Fixture: Ukraine v Portugal, Monday, 10.45pm (UAE)
TV: BeIN Sports
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Teaching your child to save
Pre-school (three - five years)
You can’t yet talk about investing or borrowing, but introduce a “classic” money bank and start putting gifts and allowances away. When the child wants a specific toy, have them save for it and help them track their progress.
Early childhood (six - eight years)
Replace the money bank with three jars labelled ‘saving’, ‘spending’ and ‘sharing’. Have the child divide their allowance into the three jars each week and explain their choices in splitting their pocket money. A guide could be 25 per cent saving, 50 per cent spending, 25 per cent for charity and gift-giving.
Middle childhood (nine - 11 years)
Open a bank savings account and help your child establish a budget and set a savings goal. Introduce the notion of ‘paying yourself first’ by putting away savings as soon as your allowance is paid.
Young teens (12 - 14 years)
Change your child’s allowance from weekly to monthly and help them pinpoint long-range goals such as a trip, so they can start longer-term saving and find new ways to increase their saving.
Teenage (15 - 18 years)
Discuss mutual expectations about university costs and identify what they can help fund and set goals. Don’t pay for everything, so they can experience the pride of contributing.
Young adulthood (19 - 22 years)
Discuss post-graduation plans and future life goals, quantify expenses such as first apartment, work wardrobe, holidays and help them continue to save towards these goals.
* JP Morgan Private Bank
How much sugar is in chocolate Easter eggs?
- The 169g Crunchie egg has 15.9g of sugar per 25g serving, working out at around 107g of sugar per egg
- The 190g Maltesers Teasers egg contains 58g of sugar per 100g for the egg and 19.6g of sugar in each of the two Teasers bars that come with it
- The 188g Smarties egg has 113g of sugar per egg and 22.8g in the tube of Smarties it contains
- The Milky Bar white chocolate Egg Hunt Pack contains eight eggs at 7.7g of sugar per egg
- The Cadbury Creme Egg contains 26g of sugar per 40g egg
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Dubai Rugby Sevens
November 30-December 2, at The Sevens, Dubai
Gulf Under 19
Pool A – Abu Dhabi Harlequins, Jumeirah College Tigers, Dubai English Speaking School 1, Gems World Academy
Pool B – British School Al Khubairat, Bahrain Colts, Jumeirah College Lions, Dubai English Speaking School 2
Pool C - Dubai College A, Dubai Sharks, Jumeirah English Speaking School, Al Yasmina
Pool D – Dubai Exiles, Dubai Hurricanes, Al Ain Amblers, Deira International School
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
