The year 2020 has been a roller-coaster ride for everyone. The pandemic has changed the way of living for many and destroyed a lot of lives. The people in the United Arab Emirates (UAE) have suffered similar fates. But, things are slowly changing now. With the government's stimulus packages and pro-business initiatives, business persons and entrepreneurs see a ray of hope.
The real estate market in Dubai has been a successful ride for many years before the pandemic happened. After ten months of a leap, things seem to have changed a little. Prices are now stabilizing in prime areas where the supply is low; nevertheless, prices are rising in some places. We are starting to see many offers for properties in these areas as well.
Let us understand a few statistics first…
Going back to the initial days of 2020, in January and February, Dubai’s real estate market saw month-on-month increases in real estate transactions following similar trends from the year 2019. During these two months, Expo 2020 was still healthy, which was seen in the transaction volumes. Of course, this trend came ahead of concerns of Covid-19, which started to heighten in March. There was a 12% year-on-year rise in overall transactions in January 2020, with the figures growing 33% year-on-year in February, with an incredible 76% rise in off-plan transactions.
Individual investors were looking at this period as an opportunity to invest in an Emirate that would be hosting the biggest show on earth, Expo 2020. This interest was also backed up by the considerable surplus supply the market still had from the previous year.
Looking more broadly in the first quarter of the year, Dubai real estate sales transactions grew by 9.74 per cent compared to the same period in Q1 2019. Q1 2020 had the highest number of transactions since Q1 2017, with the market cruising towards what looked like would be a record-breaking year.
But when the pandemic came to the forefront in March, it was evident that we would see a slowdown in transactions. Due to the UAE government’s proactive policies and speedy and innovative efforts, we made it through this challenging period quicker than most. Innovative efforts from the officials also helped the real estate market to start transacting again.
One such decision from the Dubai Land Department was the initiation of online property transfers. Once the registration trustee offices came back to work with 30% of their workforce, those looking to close a deal could book an appointment a day in advance and email the documents. That way, the interaction on-premises was reduced to a minimum. The online process implemented during the lockdown remains in place, and property registrations now can also be done entirely online.
Key Trends Emerged Since Pandemic in Real Estate Sector
The crucial new trends that have emerged are as follows:
- A notable increase in short-term leads, particularly in Dubai
- The percentage of searches for “garden” and“pool” has increased
- People are increasingly searching for bigger houses
- In rentals, the high price category units are the least affected
- Payment terms for rentals are significantly more important now. Landowners are accepting a higher number of cheques to ease the financial load on the tenants
- The percentage of searches for warehouses in commercial real estate is growing
The market started strong at the inception of the year because of the expectations surrounding Expo 2020 and fell drastically between March and April because of the Coronavirus pandemic impact.
The market touched its lowest point in May 2020, and once the lockdown was lifted, it began its recovery. Now, despite claims of a second coronavirus wave, the market appears to be fully equipped to handle the emergency. The data shows us that the market started stabilizing in June, and since then, it has steadily improved. Listings are increasing, consumers are sending more enquiries, property agents are closing more deals – some even virtually – and the number of consumers looking for mortgage pre-approvals has increased by over 30 per cent.
We see constant growth, even if it is fractional. As we slowly return to our ‘new normal’ and the Dubai real estate market becomes more dynamic and adaptable to change, some of the new trends that have emerged during the crisis look like they are here to stay.
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