UAE property market set to stabilise in 2021 amid Covid-19 economic recovery
Property prices in the UAE are expected to stabilise in 2021 as the economy recovers from the coronavirus pandemic-induced slowdown and government initiatives spur growth, according to analysts.
“Once Covid 19 is resolved, things will be better economy wise and, of course, Dubai Expo is coming next year and there is the 50-year anniversary of the UAE,” Haider Tuaima, head of real estate research at ValuStrat consultancy tells The National. “There are a lot of positive things going forward. The market could be heading towards bottoming out next year.”
New government initiatives including visas for expatriate retirees and the expansion of the 10-year golden visa scheme to attract foreign professionals to settle in the UAE are also expected to support the market.
The UAE also reformed its commercial companies' law last month and annulled the requirement for onshore companies to have an Emirati shareholder, which is expected to boost foreign direct investment in the country.
“We expect more investments to happen next year, especially from China that will help the market,” Mr Tuaima says.
The UAE’s property market is expected to enjoy greater stability in 2021, with improvements in the wider economy serving to support demand, Chris Hobden, head of strategic consultancy at Chestertons Mena, says.
“On average, residential prices will likely see moderate declines, although performance will vary by property type and location,” he adds.
With property prices in Dubai declining 13.8 per cent year-on-year in November and 0.2 per cent on a month-on-month basis, according to ValuStrat consultancy, it's a buyer's market.
The slowdown has persuaded many to invest in property market with money flowing into Dubai Marina, International City, Jumeirah Lake Towers, Arabian Ranches, Jumeirah Village, Meadows and Business Bay. Downtown Dubai and areas around Mohamed bin Zayed Road and Emirates Road are also in demand by buyers.
“There is a trend picking up in the last few months towards villas and townhouses, particularly in [the] central and eastern side of Dubai, MBZ Road and Emirates Road. In those, there are a lot of townhouses, two-bedroom, three-bedroom townhouses [that] can be had for Dh1.1 million, which is currently a very good price,” Mr Tuaima says.
Buyers are looking for areas that are well connected with good infrastructure and access to shopping malls and schools, he adds.
Apartment and villa prices declined in a number of areas in Dubai in November, according to ValuStrat. Discovery Gardens recorded the biggest drop in prices for apartments on a yearly basis at 16.8 per cent, followed by Dubai Production City at 16.4 per cent and Jumeirah Village at 16 per cent.
Prices for apartments in Business Bay dropped 14.5 per cent, while Burj Khalifa saw a 15.2 per cent dip. In Dubai Marina, prices slid 13.8 per cent during the month and International City recorded an 11.8 per cent drop in prices.
Villa prices in Jumeirah Village dropped14.8 per cent, followed by Victory Heights in Dubai Sports City at 14.4 per cent. Prices also declined by more than 12 per cent at Palm Jumeirah Villas, Arabian Ranches and Meadows.
“Most of the buyers are domestic buyers and a lot of them are first-time buyers,” Mr Tuaima says. Ready-to-move-in properties dominated cash-based sales transactions compared with off-plan properties amid a slowdown in the launch of new Residential projects, he adds.
End-users are also looking for larger apartments or villas and with separate office space, usable outdoor space, additional storage, more community or building amenities amid the coronavirus pandemic, according to Jenny Weidling, manager of research and advisory at Asteco Property Management.
“Interest in off-plan properties has definitely decreased and focus has shifted to completed properties,” she says.
In Abu Dhabi, apartment sales prices were down 7 per cent year-on-year during the third quarter, while villa prices dropped 6 per cent, Asteco says in its latest report. Al Reef villas prices slid 7 per cent during the quarter, Golf Gardens dropped 2 per cent, Raha Gardens fell 10 per cent and Saadiyat Beach Villas are down by 14 per cent.
Apartments on Yas Island saw a 13 per cent drop in price, while Sun and Sky Towers on Reem Island fell 9 per cent, Al Muneera, adjacent to Al Bandar on the outskirts of Abu Dhabi, dropped 10 per cent and Marina Square, also on Reem Island, slid by 8 per cent.
“There has not only been a shift in demand away from apartments towards villas, but also a trend that saw investors and end-users looking for properties located away from congested areas and large-scale developments amid fears of contracting the Covid-19 virus," Asteco said in its report. "As such, affordable neighbourhoods such as Al Reef and Al Raha Gardens recorded an increase in demand for sale.”
More than 50,000 units are slated to enter the Dubai market in 2021 and over 15,000 units in Abu Dhabi, according to Aditi Gouri, head of strategic consulting and research at Cavendish Maxwell.
"The main areas of interest in Dubai will continue to be MBR City, Dubai Hills Estate, Jumeriah Village Circle and Town Square. In Abu Dhabi, it will be Reem Island, Raha Beach and Yas Island."
With supply being curbed by major real estate developers like Emaar Properties, this will likely have a positive effect on stabilising the market, she adds.
“The secondary market has dominated transactions in 2020 and this trend will likely continue into 2021. In addition, villas have been more in demand than apartments overall, especially with the pandemic and people wanting larger living areas and outdoor spaces."