Dubai is known for its real estate market with never-ending skyscrapers, luxury villas, and man-made islands. Then the Coronavirus hit. Dubai is facing another real estate crisis with stalled construction, closure of construction and engineering firms amounting to job losses and prices of residential projects plunging to an all-time low. The Dubai property market is expected to slow down as lockdown is imposed to contain the Coronavirus and property agents are reporting a drop in home viewings and new listings drying up.
The outbreak of Coronavirus has hit the world very badly. It has affected the whole communities of people as well as all kinds of industries. WHO has declared it a pandemic, and it has shown its worst effects on every part of the world. Governments imposing lockdown to contain the spread of this deadly virus has affected the economy badly but done out of necessity to contain the spread. The property market worldwide was unable to escape from its effect. Every kind of travel restriction has put a halt on all businesses. However, most experts are considering this as a temporary setback, as the aftermath of COVID-19 could be promising and strong once positive sentiment returns.
Dubai Property Market Before Corona
Dubai’s property market has witnessed its 11-year high peak in 2019. Dubai had registered a growth of 20% in the volume of registered property sales transactions on year on year basis, and the credit goes to new government policies which have boosted the sector, according to the Property Finder.
Data released by Property Finder revealed that the sale of off-plan properties took the lion’s share, accounting for 23,643 transactions or 56percent of the total due to attractive prices and incentives such as waiver of service fees, post-handover payment plans, discounts on registration charges and commission, guaranteed rental returns for example that was offered by the developers.
“Going into 2020 and leading up to the Expo, we should continue to see transaction levels increase and prices start to stabilize in certain areas. We have already started to see certain market dynamics shift as a direct effect from Expo and these trends will most likely continue throughout the year,” says Lynnette Abad, director of data and research at Property Finder.
The Corona Effect on Dubai Property Market
Governments implying stricter measures to contain the spread which also includes the complete suspension of work at construction sites and halting ongoing projects resulting delay in delivery of under-construction properties.
The Coronavirus has put the dampener on recovering Dubai’s property market and with the effect, Dubai property prices have fallen to a level last seen 10 years ago. All the expansion projects have been put on hold and developers have witnessed the decline in sales.
“We believe real estate prices are approaching levels seen at the bottom of the last cycle in 2010 and are even lower on an inflation-adjusted basis and considering sales incentives for the off-plan property,” S&P Global Ratings said in a report.
Property shares of Emaar Properties were down more than a third year-to-date. The country’s housing and utility costs fell 4.7 percent year-on-year, their biggest decline in years. Dubai’s stock market is currently the worst-performing in the Middle East, down about 24 percent.
Prathyusha Gurrapu, head of research and advisory at Core, commentedthat due to ongoing Covid-19 restrictions, future handover volumes are expected to come down as construction timelines and supply chains are impacted along with softened demand.
“Further downward revisions are expected on supply forecasts as they will inherently depend on the period of the pandemic and the pace at which complete functionality returns coupled with buyer confidence as developers adjust to ongoing market conditions,” said Gurrapu.
Future Look Out of Dubai Property Market
Not all the news during this pandemic has been negative, according to the poll of analysts and real estate experts, property prices in Dubai are forecasted to stabilize after coronavirus crisis is no longer the global emergency it is today.
A forecast by leading real estate agents experts suggests a “buying boom” in the UAE once the coronavirus crisis is finally over.
Richard Waind, group managing director, Better Homes, revealed the company enjoyed a good start to 2020, with the first two months the busiest the company has witnessed in five years.
“I wouldn’t be surprised if after the virus we don’t see an influx of new residents to Dubai as it will be seen as an opportunity destination.”
Experts and real estate analysts in Dubai have indicated that there are plenty of residential property propositions currently and this has encouraged the re-adjustment of prices and rentals to benefit the end-consumers. The good news is that cost-conscious buyers who have always been willing to invest but were unable to find attractive deals previously, can now explore a greater number of affordable options and find their dream home.
Properties developed by Emaar, Damac Properties, Dubai Properties, Danube Properties, Nakheel, and Meraas, topped the sales charts overall.Top off-plan locations transacted during February were in Downtown Dubai, Dubai Creek Harbour, Jumeirah Village, Business Bay, and Liwan.
Jumeirah Village, Dubai Marina, Jumeirah Beach Residence, Palm Jumeirah, International City, Downtown Dubai, and Jumeirah Lake Towers has seen most transactions.
The world on the verge of the recession has brought an opportunity for investors. History has proven that real estate investment has turned out to be a good investment decision during times ofrecession. This is one such time where real estate prices are at its record low and if experts are to be believed Dubai property transactions are expected to spike after this moment of uncertainty.
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