Dubai’s Real Estate Market – is the worst over?
As we put the worst of the pandemic behind us, signs of recovery across the economy are evident. For the UAE, improvements in the global growth outlook combined with low-interest rates and stabilized oil prices should kickstart the domestic recovery. Dubai is expected to see a 4% growth in 2021, aided by government reforms, a recently announced stimulus, and an effective COVID-19 vaccination drive.
Market optimism is steadily increasing with the much-awaited Expo 2020 to be held in the latter part of this year. This positivity is slowly proliferating into the real-estate sector, which though affected by the pandemic, is now witnessing increased investor interest.
Real-Estate Market Staging a Return
Dubai ranks 6th in a survey of the world’s best cities. Its popularity is largely due to its safety and security, in tandem with an outstanding education system, leisure options, dynamic business flow, and its proximity to major business centers around the world. Global property consultant JLL 2020 Global Real Estate Transparency Index (GRETI), recently revealed the increasing attractiveness of Dubai as a global investment hub within the Middle East, because of its strong economic fundamentals and regulations.
UAE has established itself as an epicenter of business development, especially within AI, Tech, Blockchain, Healthcare, and Education. Dubai’s vision to be self-sustainable, and a leader in knowledge-based industries by 2030, is already enticing international companies to move their regional headquarters to the UAE.
This has created attractive prospects for the real-estate sector, which has been grappling with low returns and growth, largely due to the imbalance in demand and supply. But with new projects on hold, the steady resumption of travel, and a return to normalcy, the resurgence in demand will help stabilize rents and capital values, especially in prime locations.
Israel And Qatar To Add Much Need Investor Interest
The peace deal with Israel, and the lifting of the blockade on Qatar, will also have a positive effect on the geo-economic situation. We expect these new ties to attract fresh streams of foreign investment, further strengthening the UAE’s economic recovery.
With trade resumption and new deals being inked, Dubai’s real estate market will be the key beneficiary of this move. Dubai’s established status as a global business hub will help attract an immediate influx of new capital, leading to the city’s surplus real estate inventory being absorbed by growth in demand.
2021 and Beyond
After effective government measures to mitigate the impact of the virus, visa reforms for investors, and easing of global travel restrictions, the real estate sector can once again look forward to attracting foreign investment. As we stand, the current prices are attractive for renters within the UAE. Property developers and owners are already seeing a marked trend among tenants, who are choosing to migrate to larger units with superior amenities, which have now become more affordable. Online portals, Property Finder and Mortgage Finder are both reporting significant interest in three-plus bedroom units(1).
Residential areas, especially villas, with good infrastructure, transport links, schools, and shops, are particularly in demand this year. With the increase in Loan to Value rations announced in March 2020, by the Central Bank, combined with low-interest rates, properties in Dubai are steadily becoming an attractive option for the first-time homebuyer.
While the pandemic disrupted the real-estate sector, it also accelerated much-needed reforms. With major developers collectively addressing the demand-supply imbalance, and the post-pandemic new normal taking shape, investing in Dubai real estate is regaining its position as one of the most attractive prospects, globally.
