Flipping virtually non-existent in residential property in Dubai

Flipping is practically non-existent in the residential property market as top developers now require a significant upfront payment of 30 to 50 percent before owners can consider selling. On the other hand, the commercial land sector is witnessing a surge in flipping activities with prices soaring by approximately 300 percent in recent years. The demand for residential units, regardless of the price range, remains stable due to the strict regulations imposed by the top developers, prohibiting resale until a substantial payment is made. This has deterred most individuals from engaging in flipping practices, as the market is predominantly controlled by a select group of developers. The focus has shifted towards commercial plots, where significant appreciation has been observed, attracting speculators and investors looking for quick gains.

Flipping is catagorized where a property has been sold in under one year. “Most of the buyers are pretty mature and they have a long-term vision and to diversify their investments in Dubai for living and long-term rentability.

The real estate market has experienced a significant shift in terms of flipping. Previously, the majority of flipping activity took place in residential properties, with a remarkable 300 percent appreciation in land values over the past 24 months. However, the scenario has changed as flipping has now transitioned from residential to commercial plots. Commercial land, which was valued at Dh20 million two years ago, has become the focal point for speculators. While there is limited speculation occurring with townhouses, it remains a relatively small aspect of the overall flipping activity. One of the reasons for this shift is the intervention of property developers. They have implemented measures mandating buyers to fulfill certain payment requirements, such as paying up to 50 percent of the unit's price before being allowed to sell. This has effectively curtailed flipping in the market.

Furthermore, the current high demand for properties has prompted developers to impose additional restrictions. The market experienced a significant price appreciation in a short period following the pandemic. However, flipping is no longer as risk-free and easy as it once was. The strategy has become more widely known, surpassing the level of awareness surrounding Covid itself. As a result, the landscape of flipping has transformed, with commercial plots taking center stage.

And now the supply of off-plan is way higher than a few years ago. Because the market started to move again after Covid and there is a huge plan. Developers have tightened regulations around off-plan property. In Covid, it was possible to sell property based on 5 to 15 per cent payment. Many people entered the flipping market and ruined the prices so for the safety of the investors, developers require payment of up to 50 per cent of property value to get the NOC to resell. This restriction made it harder to flip because now developers have put restrictions

The characteristics of the Dubai property market are completely different now as compared to 2008, when people used to negotiate free transfers. Today, you don’t have that feature because you need to register your Oqood and need to pay four per cent upfront. So the chances of flipping are out completely. Secondly, because there is a ban on flipping the property before you pay 30-50 per cent of the property, so gone are the chances of flipping the property. If 90 per cent of developers have these conditions, then flipping obviously doesn’t exist.

source Khaleej Times

Date: 15 Apr, 2024

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