Dubai: Fewer handover of units expected in 2017
Officially, 31,000 units are scheduled for completion this year, but like propertyfinder.ae, JLL also expects actual deliveries to be lower than announced
Handovers of residential units in Dubai this year are expected to be significantly lower than developers’ official projections, according to research done by Propertyfinder Group.
Nearly 15,000 new residential units were handed over in 2016, the highest level since 2012, industry consultants JLL revealed this month.
Officially, 31,000 units are scheduled for completion this year, but like propertyfinder.ae, JLL also expects actual deliveries to be lower than announced.
Propertyfinder CCO, Lukman Hajje said: “As most local developers rely on purchaser funds to complete the project, the construction timeline is at best an estimation - an estimation of how quickly they'll sell as well as how quickly they can construct.
“Thankfully, these days, legislation requires that progress payments be linked to construction milestones. This offers purchasers some assurance that their funds must be used appropriately but it doesn’t protect them against slow project sales, hold-ups due to supplier, contractor and/or local government compliances issues or unfavorable market conditions. Any of which may force or encourage developers to delay handover.”
Hajje added that in the past however, delayed handovers have helped stabilise market fluctuations over the past decade and are expected to continue to play that role in the current market.
“If there is sufficient demand from purchasers, sales will take place on schedule and projects will be handed over on time. If sales are slow, it will be largely due to market conditions and insufficient demand and as a result projects in the pipeline will take longer to sell and construct,” Hajje said.
The research suggested that a rebound in Dubai’s property market this year seems unlikely, especially with constraints such as an ongoing economic slowdown due to oil prices continuing to affect the sector.
Expo 2020 is still forecast to boost Dubai’s property sector as construction of supporting infrastructure attracts a wave of new migrant workers and the exhibition itself lifts tourism numbers.