A price per square foot looks like a simple number, so people trust it more than they should. It helps only when you know what the square feet include and what you compare it with. Here is how to use it on Dubai flats without fooling yourself.
What the figure does well
Divide a price by the area and you get one number that lets you compare a studio with a three-bedroom flat. It also makes an odd offer easy to spot. If most flats in a tower sell within a narrow range and one seller asks far more, you have a question to put to that seller.
The price you divide must be a price paid, not a price asked. The Dubai Land Department records each sale. dataHabibi works from those records and shows how the price of each of more than 5,500 buildings has moved. Start from sold prices and the figure means something. Do the sum yourself, too: price divided by area. A figure printed in a listing may use an area you did not expect.
Where the figure misleads
Four things distort it.
· Size. Small flats often cost more per foot than large ones. A kitchen and a bathroom cost about as much to fit in a studio as in a family flat, so they make up more of a small price.
· Balconies. Some listings give the interior area, and some add the balcony. A large balcony lowers the price per foot without adding any living room. Ask what the area covers, and ask for a floor plan with measurements.
· Layout. A long corridor or an awkward corner counts as area, yet you cannot use it. Two flats of the same size can differ a lot in usable space.
· Condition. A flat with new fittings can sell for more per foot than a worn one of the same size in the same tower.
Compare inside one building first
Flats in one tower share their age, facilities, street and service charge scheme. That leaves size and price as the main differences. Look at other buildings only after this step.
For example, say a flat of 500 square feet sold for AED 950,000, or AED 1,900 per foot. In the same tower, a larger flat with 1,000 square feet sold for AED 1,600,000, or AED 1,600 per foot. The small flat costs AED 300 more per foot. That gap is normal and does not make the small flat a poor deal. It tells you to compare small with small. If another flat of 500 square feet sold last quarter for AED 1,850 per foot, the first one looks fair. If the nearest match sold for AED 1,500, you have something to ask about. These figures are not real; they only show the method.
Three steps for any listing
1. Find out what the area covers: interior only, or interior plus balcony.
2. List three to five of the latest sales of similar-sized flats in the same building, and find the price per foot of each. Prices move, so the newest sales count most.
3. Set the asking price per foot beside that range. Inside the range, the price looks fair. Well above it, ask the seller why.
Watch the sample size. If only two flats of your size sold in a year, treat the range as a rough guide and add the nearest buildings to your list. Use the same area basis for every flat you add.
A figure to question
Be careful with any average price per foot quoted without a date or a building. An average mixes large flats with small ones and old sales with new ones. When someone calls a flat cheap for its area, ask: cheaper than what, and when? Ask how the seller measured the area.
Match age as well as size. A launch price per foot in a new tower and a resale price per foot in an older one answer different questions, so keep them in separate lists.
Use price per foot to narrow your list, not to make the final choice. Once it has done that, look at the unit itself and at the sales around it. To try the three steps on a real tower, search for it at datahabibi.ae.
