Charting Dubai’s real estate evolution during Covid-19
At the pandemic’s peak, Dubai’s oversupply problem worsened as the demand for properties witnessed an all-time low during those unpredictable times. However, the UAE received global praise for how its government responded to the many challenges by introducing various support initiatives to soften the economic and social impact.
In the real estate sector, we saw the reduction of interest rates, reduction in the Loan-To-Value ratios for loan facilities, 100% foreign ownership laws, golden visas, and more. More broadly speaking, attractive exchange rates, regulatory reform, favorable banking systems, low taxes, and a statutory framework to protect foreign investment have strengthened Dubai’s reputation as a safe haven.
As a result, signs of recovery manifested towards the end of 2020 when the market started to pull through, despite the ongoing Covid-19 situation. Since then, as anticipated, we’ve seen a positive start during the first quarter of 2021 as buying and selling activity continued to pick up.
- 3,036 new investors entered the real estate market during January and February of 2021 as reported by Dubai Land Department (DLD), helping investments in the market reach AED 14 billion from local and international investors.
- Dubai Marina, Business Bay, Palm Jumeirah and the Burj Khalifa were the most attractive locations for property sales during those two months.
Inevitably, a period of such unprecedented change has influenced trends and set new standards that are re-shaping property sector as we know it. These include:
Increased demand for mixed-use developments
Apartments located in areas where there’s a mix of facilities e.g. retail, education, healthcare, fitness and leisure have become more desirable with people choosing to avoid crowded places and long commutes. Instead, they prefer their daily needs to be met on their doorstep.
Demand for bigger living spaces
Previously, many buyers and renters in Dubai looked for smaller apartments as they were more affordable and cost-efficient. However, since lockdown, and with many people still working from home, they have realized the benefits of a more spacious home. A higher number of rooms, complemented by open-plan living areas, and outdoor spaces, like balconies and gardens are top priorities. Hence, a significant increase in townhouse and villas sales over recent months.
Secondary market rise
The primary (off-plan) market definitely suffered the impact of Covid-19 in 2020; however, the secondary (ready property) market has seen a healthy rise. This is mainly because construction work paused during the outbreak and that created uncertainty for buyers. According to Property Monitor, in 2019, 43.7% of Dubai Land Department transactions were attributed to the secondary market and 56.3% to the primary market. In 2020, there was a 10.8% swing, with secondary market accounting for 54.5% of all transactions, the majority occurring in Q3 and Q4.
Many industries have created digital solutions to cope with the new normal and real estate is no exception. Virtual property viewings are increasingly popular amongst realtors and developers. Viewing a property from the comfort of home has made life much easier for buyers and investors, as well as enabling brokers to broaden their network of clients locally and internationally. The ease and speed at which a property transaction can happen digitally have been another boost for the number of transactions.
These are just some of the ways the market has evolved, and had it not been for the pandemic, they could have taken years to emerge. No one knows exactly what the future holds, but what we know for now is that these trends will remain for a while yet.
© Black Brick Property LLC