The UAE’s property sector could get a boost from positive news on the COVID-19 rollout and the World Expo event in 2021, but it may take a year or two for the market to bounce back and return to pre-crisis levels, a top executive told Zawya.
The market for apartments, villas and commercial spaces in the UAE has been lacklustre over the past several months due to the economic challenges resulting from the coronavirus outbreak. It suffered the biggest blow at the outset of the health crisis as economies worldwide shut down.
With the reopening and easing of COVID-19 restrictions, the uptake of homes has picked up recently, but rents and sale prices are still lower than the levels seen before the outbreak. At the same time, developers have opted to forgo new project launches, which has somewhat addressed the huge supply glut of homes.
“Property prices have dropped, and we are expecting further declines over the final quarter of 2020 and into 2021, with the ongoing economic impact of COVID-19 and a likely reduction in the UAE population, both key drivers of Dubai residential prices, set to hamper market performance,” Amira Sajwani, Senior Vice President at DAMAC, said.
Sajwani noted that several analysts have begun reporting hints of a market recovery. “However, I believe it will be a long one, perhaps 12 to 24 months,” she added.
Nevertheless, this doesn’t mean that the whole of next year will be turbulent for the real estate sector in the UAE.
UPTICK IN SALES
“While there will be challenges in the coming year, there are a lot of positive developments that point to increased activity. I cannot predict an exact moment when this will happen because there are several fluctuating developments and factors. I do think, however, with [the COVID-19 vaccine rollout], this could mean more people will be travelling and there will be an acceleration of tourism,” Sajwani said.
“With more visitors coming to Dubai and Expo 2020 fast approaching, I predict an uptick in sales activity and transactions in the real estate market,” she added.
Sajwani pointed out that Dubai saw a “notable” increase in property transactions during the third quarter of 2020, building on the momentum seen in the second quarter, when restrictions begun to ease. The stay-at-home and social distancing trend has fuelled the demand for residential units with private outdoor spaces. “So, while some property sales have seen drops, others have seen upticks.”
RESPONSE TO CHANGING MARKET TRENDS
Given the massive changes brought about by COVID-19 in the way corporates do their business, firms like DAMAC have decided to scale up digital initiatives to attract and connect customers, particularly those based overseas who cannot travel to the UAE. Despite the mobility restrictions, homes around the UAE still managed to attract some buyers.
“We are adapting to these changing trends and are doubling down on our [digitisation efforts] to optimise our performance amid these market conditions […] Through our virtual home tours, we have been able to sell homes without our customers even stepping foot in the UAE,” Sajwani said.
At the moment, however, new project launches aren’t at the top of the priority list. The developer is instead expediting the completion of its remaining inventory, optimising operational costs and focusing on cash collections.
In recent months, it has awarded a contract worth 181 million UAE dirhams ($49.2 million) for the main construction works in the developer’s ZADA Tower in Business Bay. It has also topped up Tower B of its AYKON City project in the Shaikh Zayed Road/Dubai Canal area.
The Dubai-based developer has property projects outside the emirate, reaching as far afield as Beirut, Riyadh, Saudi Arabia and Toronto. Its international arm, The DICO Group, is currently looking to expand its portfolio, with a focus on the UK and other European markets. Recently, it acquired the Italian luxury brand Roberto Cavalli.
The developer’s customer base consists of buyers outside the GCC region, particularly India, the United Kingdom and neighbouring Arab countries. Recently, it has seen growing interest coming from Chinese nationals.
“We are persevering during these challenging times the market is facing and recording important progress as we focus on deliveries and continue construction projects […] Through hard work and a forward-thinking team, we are continuously striving to operate more efficiently,” said Sajwani