March 15 2016
By Lookup.Ae Sales
In this report we analyze the current state of the off-plan property market in Downtown Dubai. We explore all under-construction projects and current price trends. We also take a closer look at current & future supply in the community.
Since 2011 the Downtown Dubai market has evolved in the following ways:
- Downtown Dubai was one of the best performing residential markets in the city during the recent market upturn. In 2011, average transaction prices for apartments in Downtown was approximately AED 1,470 per sq. ft. Over the subsequent 24 months, prices appreciated by 47% and peaked at AED 2,780 per sq. ft. on average.
- Since reaching their peak in Q1 & Q2 2014, prices have depreciated 15% and average AED 2,415 per sq. ft. today.
- The prices we report for apartments take into account both high-end and luxury developments within Downtown; these figures do not include prices of serviced apartments in the Address Hotels which is a specialized segment.
- A majority of the residential component of the Downtown district has been completed. We currently estimate that a total of 8,834 apartments are ready in Downtown Dubai whereas 3,837 are under-construction. Under-construction supply is 83% of ready supply.
- Emaar and other private developers have launched several hotel / serviced apartment projects in Downtown. We currently report 2,611 ready hotel rooms / serviced apartments and 4,137 under-construction hotel rooms / serviced apartments.
- The retail component of Downtown Dubai has matured. The Dubai Mall is now recognized as the most trafficked retail hub in the world and retail along Mohammad bin Rashid Boulevard has added new life to the community. The Dubai Mall is being extended in two directions, future extensions will be under the Fountain Views complex and below Downtown Views.
- In 2015, Emaar announced the construction of the Dubai Trolley, a tram system which will run through Downtown Dubai. The Dubai Trolley is expected to be operational this year.
Off Plan Market
When the market collapsed in 2009, several projects in Downtown Dubai were put on-hold including 29 Boulevard, Boulevard Central and Claren Towers.
In 2012, Emaar launched the Address BLVD, a five star hotel and luxury serviced apartment building, which sold out within 24 hours of launch. These units were sold at prices of AED 1,800 per sq. ft. on average. In the following months, premiums commanded for these serviced residences rose steadily, eventually peaking at 110% for prime units.
Following the success of Address BLVD, Emaar launched a number of new projects at various price points. High-end apartment buildings included Burj Vista, Boulevard Point, Boulevard Crescent and Boulevard Heights. These projects were launched for between AED 1,900 – 2,300 per sq. ft. A luxury building called Opera Grand was launched in 2014 with prices above AED 4,000 per sq. ft., by far the most expensive launch in Dubai in the past few years.
In addition to the apartment buildings, Emaar have capitalized on the strength of their hospitality brands and launched Address Sky Views, Address Fountain Views, Address Opera and Vida Residence. All the projects have both a hotel component and luxury serviced apartments. Launch prices for these towers ranged from AED 2,500 – 3,300 per sq. ft.
A number of private developers have also acquired land within the Downtown district and have launched both apartment, serviced apartment and hospitality projects.
The following projects are currently under-construction in Downtown:
The below graph shows historic and future supply of Apartments in Downtown Dubai from 2006 – 2019. No new apartment projects will be delivered in 2016.
The below graph shows historic and future supply of hotel rooms & serviced apartments in Downtown Dubai from 2006 – 2020. In 2016, we expect the Address BLVD and Damac’s Distinction & Upper Crest to be handed over:
The map below shows where construction within Downtown is taking place and labels the under-construction projects:
Current Performance of Off-Plan Projects
The below are the major projects in Downtown Dubai by Emaar where there is some secondary market activity. We give a summary of each of these building’s launch prices, their peak premiums reached and current premium / transaction activity. This helps put into perspective how the off-plan market has corrected.
The Address BLVD was the first major project to be launched after the financial crisis of 2008 / 2009. The landmark tower rises 63 storeys and has 200 hotel rooms and 542 serviced apartments. Address BLVD is expected to be handed over in late 2016.
Launched in October 2012 at approximately AED 1,800 per sq. ft., which in hindsight is an absolutely fantastic price for serviced apartments in an Address branded residence. It also demonstrates how far the market has come since its lows reached in 2011.
Currently front-facing units with full fountain & Burj Khalifa Views are selling for 75% premium (peak premium reached was 110%).
Back facing units (views of DIFC / sea) are currently selling for 20 – 25% premium (peak premium for these type of units was 60%).
Address Sky View
The Address Sky Views will consist of 532 serviced apartments and 180 hotel rooms. The twin tower development will rise 50 storeys and be interconnected by a unique Sky-bridge. The towers consist of 1, 2, 3 and 4 bedroom serviced apartments.
Address Sky Views was launched in April 2013 at an average price of AED 2,500 per sq. ft.
Front facing units with views towards the Burj Khalifa and Downtown community are currently at 10% premium. Peak reached was 40% premium.
Back facing units with views towards Jumeirah and sea views are currently selling at original price. Peak premium for these units was about 15%.
Burj Vista consists of two towers (Tower 1 is 65 storeys tall and Tower 2 is 20 storeys tall).
Both projects consist of 1, 2 and 3 bedroom apartments.
Burj Vista units were launched over several weeks starting in May 2013 at average prices of AED 1,900 per sq. ft.
Front units with views towards the Burj Khalifa are currently selling for 15% premium on average (peak reached was 40% premium).
Back facing units towards Address Sky View are currently selling for 5 – 10% premium (peak reached was 30% premium).
Address Fountain Views
The Address Fountain Views are 3 high-rise towers which sit atop a 9 level podium which will be an extension to the existing Dubai Mall.
Address Fountain Views 1 & 2was launched in January and February of 2013. Opening prices ranged from AED 2,500 – 2,800 per sq. ft.
Front facing units with Burj Khalifa and Fountain Views are selling for 25% premiums (peak was 50% premium).
Back facing units with views towards Business are selling for 5% premiums (peak was 25% premium).
Address Fountain Views 3 was launched in October 2013 at prices averaging AED 3,200 per sq. ft.
Front facing units with views towards the Burj Khalifa / fountain are currently selling for 25% premium (peak was 40%).
Back facing units (towards Business Bay) are selling for 10% premium (peak was 25% premium).
All three towers are expected to be delivered in late 2017, or potentially early 2018. Learn more
Boulevard Crescent & Blvd Heights
Both towers were launched close to each other (March and June 2014). Average launch prices were at AED 1,900 per sq. ft.
These towers never picked up momentum on the secondary market and currently quite a few units are available at negative premiums.
The construction of both these projects has recently commenced and we expect deliveries to take place in 2018.
Learn more about Boulevard Crescent Learn more about Boulevard Heights
The Boulevard Point is located next to Address Fountain Views. This high-rise offers 1, 2 and 3 bedroom apartments.
Boulevard Point was launched in January 2014 at approximately AED 2,300 per sq. ft.
Front facing units with Burj Khalifa views are currently selling for 5% premium (peak premium reached was 15%).
Back facing units are currently selling at original purchase prices (peak premium reached was 5%).
Launched in May 2014 at average prices of AED 4,400 per sq. ft.
Following launch, there was a bit of momentum and some transactions were done for 5 – 10% premiums for the larger sized units. Many units are currently available at negative premiums.
Opinion on Downtown Market Feasibility
These are the key points that buyers & investors of Downtown Dubai should be aware of:
- The Downtown District is probably the most well planned and luxurious property district in the MENA region. The area itself is a recognized brand.
- Prices in Downtown should not necessarily be compared with other areas in Dubai. Many investors choose to compare value here with other major downtown districts in the world including Singapore, London and Hong Kong. When viewed from an International perspective, Downtown Dubai property is considered to be under-valued.
- The area continues to attract luxury property buyers from all parts of the world.
- There are now a number of good buying opportunities in Downtown as asking premiums for almost all projects has steadily declined. In very few cases, units are available at negative premiums.
- For most off-plan Emaar projects, anywhere between 30 – 70% of the original purchase price would have to be paid upfront.
- If buyers look beyond Emaar options, then RP Heights, Mon Reve, Mada Residence and The 118 are all offering more value propositions. These projects generally have larger unit sizes and are cheaper on a price per sq. ft. basis.
This report was written by Gibran Y. Bham, a Co-founder of Lookup.ae To get in touch please contact firstname.lastname@example.org To report any inaccuracies in this report, please email email@example.com