Many who bought great off plan launches Dubai realty saw from 2012 have started to ask that where are their properties and not getting much for a reply. They are asking from their developers.
For them, the wait continues for their properties to be delivered. It is likely to be a approximated that only 60% or so of these launches have gone through the handover process.
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On the annual supply of newly completed homes in Dubai, this year it has started to tell and the market would be lucky to experience another 8000 units getting delivered.
In the first 7 months, only 18% which is 4,769 units of the estimated 27,000 units have been handed over, according to a data.
Private sector’s developers of Dubai especially are in no rush to see their already existing projects.
Unmet Obligations & Delays
They could be slipping back into the habit of delaying the projects and giving no heed to meet their obligations towards the buyers. The tactic is not helping for the good of market. The number of supplies has fallen below the projection level over past 3 years and this year it is likely to be lowest in 4 years as per the MD of Global Capital Partners.
It appears that H2-16 will be having same deliveries as H1 which is 4,700 units. Controlling the supplies is the way through which this tightness can be responded which took hold of the property market since mid 2014, the year which saw 18000 rough deliveries and year 2015 it was around 11,000 units.
Their argument is that by restricting the supply, it will make sure that property values will not soften quickly. Also with their cash positions under stress, there will be a natural effect on the schedules of the project.
Again this is not representing the whole market, as per the consultancy in its last updation on Dubai’s situation. A few of the prime developers delivering key flagship projects stayed relatively on track for their timeline of deliveries.
Also the developers that concern over excess supply destroying the values don’t seem to hold water. The market is experiencing a soft in values and not a crash as it was back in 2009-10. All of the established locations of Dubai- Palm, Dubai Marina and Downtown can take the corrections in their stride. Existing investors have not yet panicked.
Whether government owned or private-developers are still launching. It’s been days since it has announced that Palm 360 hotel & residences and apartments including 12,000 square feet penthouses will be carrying a super premium tag.
Real estate giant Shapoorji Pallonji is also making its entry into real estate development with its offering in upscale residential in Downtown. If they would have been concerned about the market response, they won’t be launching this now.
The investors will need to make the payment obligations to the developer/mortgage leader. When the delay happens, it means that their chances of recouping those investments get put back by so many years. At a point, these investors may lose patience and can file a complaint against relevant authorities.
Penalties for Delay
The introduction of the penalties for the delay is a practice which is prevalent in many markets and provides some relief to buyers- notwithstanding further impact on delivery margins and their ability to align stock with demand. For private developers, the situation is full of after effects. The next wave of buyers would give their attention and funds to government owned developers and their launches or ongoing projects.
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Such a consolidation of buyer interest on a few of top developers can cause chaos in private developer ranks. They will blame themselves if insisted upon stretching the few projects beyond 4-5 years.
The next time Dubai’s property market heads for an upturn, they could be the ones left well and behind.
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