Despite a downward trend in property prices, sentiments in Dubai’s real estate sector are high owing to the recent developments in UAE-Israel relationships and pent-up demand over the last few months leading to an uptick in sales. The historic UAE-Israel peace deal was signed in Washington yesterday and this will play a positive role in attracting investments in real estate, say industry experts.
Andrew Cummings, co-founder and managing director of luxuryproperty.com says both the UAE and Israel share many synergies. The two countries have a dynamic economy and a technology-first approach to development. “The UAE offers an excellent opportunity for Israeli investors looking to diversify their real estate holdings and achieve a good rate of return. The close geographic proximity will also be appealing and compared to many international cities such as London and New York, the shekel will stretch much further in the UAE,” he explains.
Two weeks ago, the first Israeli commercial flight landed in Abu Dhabi from Tel Aviv carrying a large delegation of Israeli officials and media and the message of hope and peace. Elaine Jones, executive chairman of Asteco Property Management says the possibility of an “increase in our potential investor base is welcomed, most particularly at this time.” Where Israel investors buying property in Dubai are concerned, Jones says registration of property by any nationality needs to be first approved by DLD. “We expect a clear directive from them shortly,” she says.
Dubai’s IBC Group has already received expressions of interest from a 54,000 person strong group of Israeli investors. Khurram Shroff, chairman of the IBC Group, says he is ready to promote exclusive and kosher-compliant portfolio offerings to investors from Israel in collaboration with its Switzerland based international partner Smiling House. “There is potential for a tremendous amount of interaction between the two nations. Israelis have invested in real estate all over the world, and the UAE market is sure to benefit from this interest.”
To service the large contingent of potential tourists, partners and investors, which the agreement between the two nations has opened the doors to, the IBC Group is also planning to open an office in Israel. “We are planning to hire Hebrew speaking professionals, well versed in Israeli markets and the specific needs of customers from the region, to address this influx of travellers and investors,” says Shroff.
According to Shroff, Israeli nationals buy bigger and more private homes than many other nationalities. “We are making all arrangements in our holiday homes to ensure that our Israeli guests are comfortable during Shabbat. This will include electric connections for hot plates, constantly boiled hot water in large non-electric canisters, automated elevators that don’t require manual intervention, Kosher gold cutlery and much more. In fact, a Kosher compliant stay can be more easily facilitated in a holiday home, rather than a hotel because guests are often unable to press a button for services. Israeli travellers and investors are likely to look with interest, at UAE based holiday homes,” he explains.
An unseasonal uptick
UAE property prices have declined almost 1.4 per cent on a monthly basis, as per the Property Monitor monthly market report for August. Last month, property prices were at an 11-year low, at Dh807 per square feet. August has always been a slow month for transactions as it’s the peak of summer with many residents and citizens travelling overseas. However, this year because of the coronavirus pandemic, figures have been much better owing to the pent-up demand over the last few months when movements were restricted. As per the report, August compares favourably to both 2019 when a monthly decline in sales volume of 48.5 per cent took place and also 2018 when a decline of 39.9 per cent in sales was registered.
Zhann Jochinke, COO, Property Monitor, says, “While at an emirate-wide level property prices are on a decline and on pace to breach previous market lows, there is an unseasonal uptick in sales transaction volumes with last month marking one of the strongest August periods in recent years. When analysed at a community level, there is a dearth of inventory in certain communities. In the villa and townhouse communities, such as Jumeirah Golf Estates, Damac Hills, Jumeirah Islands and Arabian Ranches, we are seeing demand outstrip supply with quality resale inventory moving quick. Property prices in such communities have displayed a significant slowdown in price depreciation over the past three months, with some even starting to turn positive.”
He explains, “With memories of mobility restrictions fresh in many owners’ minds, those who may have otherwise considered selling have not listed their properties and are sitting tight, while others are deterred from selling at this time with current market values at historic lows. If good quality ready properties remain in short supply then we expect bidding wars to become more common practice and as a result, witness some modest price appreciation.”
Cummings says post lockdown the real estate market in Dubai has been transformed. “August and September have seen increased transaction numbers resulting in a near doubling of our year-on-year revenue. For the first time in a number of years we have seen multiple parties bidding on properties and in some areas properties selling for over the asking price.,’ he says. Cummings feels one of the reasons for this is supply. “While Dubai is still set to deliver a large number of units this year, at present there is a lack of supply for properties that are in demand. This is either because owners have decided not to sell or have leased the properties, creating an undersupply. This is particularly the case in popular villa communities like Palm Jumeirah and Emirates Living, and in newer areas like District One and Dubai Hills.”
The turning point for the real estate market will come with free travel and movement, says Jones. “The new retirement visa, and the newly created demand for space, security and quality of life will create the demand in the market.”
The summer has also seen a higher demand for storage and logistics operations. “Some people fearing job security have moved their wives and children to their countries of origin, while they have moved into smaller accommodations for a trial period, putting their items in storage,” Jones explains.
Originally published on Gulf News on 16.09.2020