Ryan Mahoney, Dubai, UAE-based CEO of Better Homes, has extensive experience of the region’s property market. This article will take a look at what is in store for the Dubai property market following the COVID-19 pandemic, identifying predicted trends for the year ahead.
COVID-19 impacted virtually every industry. Nevertheless, HSBC has described the recovery of the Dubai property market as ‘remarkable’ with Morgan Stanley sharing similar sentiments.
HSBC Holdings cited an increase in demand for larger homes throughout the COVID-19 pandemic as a driving force behind market buoyancy, with Morgan Stanley market analysts predicting that the rally could last for several years.
According to HSBC spokesperson Stephen Bramley-Jackson, despite negative population growth and supply concerns, Dubai’s reported sales rebound has been remarkable, with migration to larger homes reigniting Dubai’s residential property sector.
The recent positivity from HSBC and Morgan Stanley was welcomed by many in the property industry, who were pleased to see industry leaders echoing what those within the industry had been saying since 2020.
The change is more than sentiment too, as evidenced in the figures; Dubai’s property market witnessed the highest value of sales in April 2021 for more than four years, with transactions topping more than AED10.97 billion, according to statistics published by Property Finder.
The UAE’s property market, specifically that of Dubai, reported record sales in the first half of the year on the back of pent-up demand produced by the pandemic combined with a progressive regulatory framework.
Despite its impact on other industries, COVID-19 actually proved to be a growth accelerator for property markets around the world, with many mature real estate markets experiencing low supply and high demand. A similar trend was observed in the UAE, where – during the course of 2020 – the real estate market remained surprisingly buoyant, particularly in the residential sector. Similarly, 2021 got off to a strong start, with sales transactions steadily increasing month-on-month as demand continued to rise.
There are many factors behind the Dubai property market’s resilience during the pandemic, with proactive government incentives like special retirement and investor visas providing a significant boost to the industry. Similarly, the reduction of the loan-to-value for first time buyers had a positive impact, combined with competitive mortgage products, low interest rates, and attractive property prices.
The 2021 rise in residential property prices in Dubai was supported by a swift vaccine rollout across the country, raising hopes for rapid economic recovery overall, according to one Reuters poll.
Ranking as the second richest emirate in the UAE, Dubai eased COVID-19 restrictions in May 2021, enabling hotels to start operating at full capacity once again and the city state to restart its tourism industry.
The first half of 2021 saw the highest amount of off-plan transactions month-on-month reported since February 2020, indicating that the off-plan sector was picking up once again, with developers attracting foreign investment with attractively priced schemes and capitalizing on new visa regulations to attract direct foreign investment.
The pandemic also catapulted co-working spaces into the limelight, as well as creating growth in the cloud kitchen and warehouse sectors, as more and more businesses went online. Although offices and retail property occupation fell throughout the pandemic, this is also changing rapidly as lockdowns ease and the world returns to normality.
In Dubai’s residential property market, industry experts predict that growth will continue throughout the rest of 2021 into 2022, with villas and townhouses continuing to drive higher prices within the sector, while competitive mortgage products and low interest rates continue to have a positive impact for buyers.
Market gains are largely attributable to built-up demand during lockdown, combined with positive trends for townhouses, villas, and waterfront properties, lifting the spirits of investors, boosting their confidence, and ultimately driving an increase in sales transactions across all segments of Dubai real estate.