The price is right for villa life

On the well-manicured streets of Arabian Ranches, where homes typically sell for up to Dh8 million (US$2.1m), there are few signs of the Dubai property market downturn.

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Villas in the Emirates Road community are often sold a few weeks after they hit the market.

And asking prices for some climbed 10 per cent in the past year, according to propertyfinders.ae, a sales website.

Around Dubai, villas are selling at a crisp rate, while apartments in many of the iconic skyscrapers are still experiencing low demand and falling prices.

"A good villa will not stay on the market more than one month," says Wassim Abdullah, a sales consultant with Better Homes. "And if the price is good it will sell in one week."

After years of declines, research shows prices for villas are starting to stabilise and even increase in sought-after neighbourhoods.

For Dubai's property market, any sign of sales activity is considered good news.

Much of this revolves around high-end villas in hot locations, such as Arabian Ranches and Emirates Hills, where homes are regularly priced between Dh15m and Dh75m.

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"I haven't been this busy, ever," says Myles Bush, the managing director of Powerhouse Properties, a five-year-old company specialising in luxury villas.

In August the company made five sales in Emirates Hills and Palm Jumeirah, worth a total of Dh75m.

Sales are benefitting from the basic supply-and-demand equation. Villas comprise only 21 per cent of the existing supply, and there are even fewer with the prime locations and golf course views prized by buyers.

"You look at the number of quality villas and they are limited," says Mr Bush.

On Palm Jumeriah, where prices for villas have actually increased in some areas, sales have been aided by buyers looking for a haven from turmoil in the region.

"[Villas on the Palm] remain very popular as regional investment capital flows towards prime products," a report by CB Richard Ellis highlighted.

The number of transactions on the Palm increased by 87 per cent in the first half of the year compared with the same period last year, says Mark Towers, the managing director of Edwards and Towers, a property agency focused on the Palm.

Of those buyers, 40 per cent were from around the region, compared with 25 per cent a year earlier.

Many of those were from Saudi Arabia and other GCC countries, looking to buy second or third homes, and they were willing to pay cash for villas priced at more than Dh10m, says Mr Towers.

But there has also been increased activity at the Dh2m to Dh3m level, as more lenders show a willingness to offer mortgages on villas.

"There has been a slight loosening up of liquidity," Mr Towers says. "We're seeing a few more financed deals starting to happen."

The villa sector is now clearly outperforming the apartment market, which is still suffering from oversupply. In the past year, prices for villas in Palm Jumeirah and the Springs declined only 3 per cent, compared with drops of 13 per cent for apartments in Jumeirah Lake Towers and 11 per cent for Dubai Marina, according to Asteco, the property management company.

Average sale prices in Arabian Ranches are essentially unchanged from a year ago, now that many of the distressed sellers have left the market.

"All the desperate people have already sold their property," says Mr Abdullah.

But the phenomenon is not universal.

There is new competition for villa buyers from developments such as Falcon City, The Villas and Motor City in Dubailand, where prices are often up to 30 per cent less than in established communities.

"There are signs of life, but it is still selective," says Craig Plumb, the head of research for Jones Lang LaSalle's Dubai office. "A lot of villas are being sold, but the pickup has been patchy."

Buyers are looking for villas in established communities with amenities already in place, according to agents. And they are still seeking bargain prices.

"If the price is not right [a villa] could be on sale for one or two years," says Dilya Dossanova, an agent with Provident Estate. "It all depends on the individual owner."

Many buyers are those who used to rent apartments and are now taking advantage of the 30 to 40 per cent drop in villa prices in the past two years. Instead of the investors who dominated the market during the boom years, they are people looking for a home.

Villas offer privacy, backyards and living space. Maintenance fees are also far less than those being charged for apartments. For example, the fees for a four-bedroom villa might total about Dh10,000 compared with Dh40,000 for a prime apartment, property agents point out.

Developers are cashing in on villa activity.

Nakheel, which had abandoned new developments to focus on completing existing projects, recently switched gears and announced plans to build 102 townhouses on Palm Jumeirah, citing the growing interest for villas and premium homes.

"We are monitoring [the villa market] closely," Ali Rashid Lootah, the chairman of Nakheel, said in a recent interview. "We see demand is coming back in Dubai for that."

kbrass@thenational.ae

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