The UAE property market is expected to pick up this year on the back of new government policies and the Expo 2020 Dubai event, according to analysts.
The real estate market has endured five years of declining prices following a drop in oil prices that began in 2014, as well as ongoing concerns about an oversupply of properties. Dubai sales prices were 7 per cent lower, year on year, for apartments and 9 per cent lower for villas in the third quarter of 2019, according to a recent report from consultancy, JLL.
“While the expo will undoubtedly have a positive impact on the property market, there are multiple factors that will drive the growth of the market in 2020,” said Matthew Gregory, director of property at classified listings portal dubizzle.
“In 2019, we saw multiple government policies come into effect – from long-term visas for investors, through to a committee for the off-plan market – which have all contributed to incentivising investors and boosting their confidence.”
In September, Dubai formed a higher committee for real estate planning, headed by Deputy Ruler Sheikh Maktoum bin Mohammed.
It is made up of a number of senior property developers and aim to provide a better supply balance in the emirate’s property sector through greater collaboration between government-related entities and private sector firms.
Other measures rolled out by the government last year included 10-year visas for investors and professionals, as well as reforms to real estate laws in Dubai.
Another change saw the Real Estate Regulatory Agency given responsibility for overseeing the development, brokerage and management of Dubai property, while the Dubai Land Department took on the responsibility of registering rental contracts and regulating the relationship between property owners and tenants.
The Central Bank of the UAE is also considering easing rules regarding the cap on lending to the real estate sector.
Dubai’s new House Price Index, Mo’asher, was rolled out at the end of last month with the first data point showing a 1.4 per cent rise in November.
The index, which uses Dubai Land Department data in partnership with real estate listings portal Property Finder, provides consumers with updated property sales price insights in the emirate on a monthly basis.
Property Finder also plans to release area-specific data in sub-indexes in the coming months.
The emirate also made changes to laws allowing foreigners to own freehold property in designated zones such as Saadiyat Island. Foreign investors in Abu Dhabi’s real estate market were previously granted leasehold for a maximum time period of 99 years.
“Property prices are closely linked to supply and demand – we know that there are over 124,000 units expected to be handed over across the UAE by the end of 2021,” Mr Gregory said.
“If only 0.5 per cent of the expected 25 million visitors of the Expo 2020 decide to invest in property, then we will likely see the scales begin to tip in the opposite direction.”
Chris Hobden, head of strategic consultancy at Chestertons, said 2020 would be an exciting year for the local property market, with Dubai’s mega event providing a backdrop to showcase a range of real estate opportunities across the Emirates.
“While we expect average prices for UAE residential property to decline over 2020, this will be at a lower rate than 2019 and values may well level off in certain locations.”
This year will also see a rise in demand for flexible space, said Mr Hobden, with office occupiers “evermore attracted by the potential efficiencies and low capital outlay offered by serviced office and co-working options”.
Developer interest in co-living schemes is also likely to gain pace, with anticipated demand from young professionals, he said.
Mr Hobden said “e-commerce will bring new challenges and opportunities for the UAE’s retail sector, with landlords and retailers needing to focus on enhancing consumer experience to drive footfall”.
The fall in rents and sales prices across asset classes over the past five years has made Dubai increasingly attractive to live and work in and also to service a wider demand base, said Prathyusha Gurrapu, head of research and advisory at real estate consultancy Core.
“Dubai is reaching a cyclical peak in supply deliveries in both the residential and commercial markets with developers aiming to handover projects before Expo 2020,” said Ms Gurrapu.
“However, with objectives to align stock segments with target demand and safeguard private investor interests, we expect ongoing government reforms to limit supply and drive demand [and] in-turn aid the absorption of existing inventories.”
Originally published on The National on 01.01.2020