Dubai home sales plunge; job cuts, expat repatriation to hurt market
As of June, property sales already down more than half, says ValuStrat
The Dubai housing market continued to take a hit from the coronavirus pandemic, with sales activity plunging by more than half in June, even after real estate agents and other businesses reopened from the nationwide lockdown, research shows.
A total of 4,459 homes were sold in Dubai during Q2 2020, down 48.8 percent compared to Q1 2020. Sales of ready-to-move-in homes fell 56.6 percent in Q2 compared Q1 and 43.6 percent compared to same time last year, according to ValuStrat’s latest report.
Sales of off-plan residential units also dropped by 43.7 percent quarter-on-quarter and 36.9 percent year-on-year. Off-plan sales represented 66 percent of all home sales. Residential rental values were also down 5.2 percent quarter-on-quarter.
Buyers snapped up apartments and villas with a total value of 7 billion UAE dirhams ($1.9 billion), with an average ticket size of 1.57 million dirhams, during Q2.
Researchers at ValuStrat did not say when the slump will ease or sales upticks will start to show, but they warned that the anticipated decline in population numbers due to massive job cuts and expat repatriation could have a negative economic impact.
Oxford Economics had earlier estimated that some 900,000 people in the UAE, mostly expatriates whose residence visas are tied to their employment, could lose their jobs as a result of the pandemic. It said that the dependence of the country, as well as the rest of the Gulf region, on foreign labour, coupled with “large swathes of job losses,” may result in “significant falls in population.”
“The economy could face challenges resulting from a shrinking workforce significantly filled by foreign talent especially in the private sector. A decline in expatriate population could have a detrimental effect to the country’s overall economy,” ValuStrat said.
The country’s real estate sector plays an important part in the UAE economy, contributing 5.4 percent (80.2 billion dirhams) to the gross domestic product (GDP), as per latest data.
“Our latest findings have already shown COVID-19 pandemic impact on real estate activity which may result to contraction in its contribution to the economy,” ValuStrat noted in its report.
Slowdown
The property market, as most areas of life, grounded to a halt in March when governments around the world imposed coronavirus lockdowns. “[When lockdowns were implemented,] there were reports of mass layoffs by major developers, banks and airlines, and with restricted travel, population growth was at its minimum. This negatively impacted much of the economy, trickling down to the real estate market,” ValuStrat said.
Some real estate developers had recently reported high uptake of properties shortly after the reopening of the economy, with Nakheel alone reporting last month that it managed to sell 250 properties worth $163.38 million within the last four months.
According to Aqil Kazim, Nahkeel chief commercial officer, their latest sales transaction data showed that there is still a demand for residential properties amid the current economic turmoil. “This hive of sales activity, achieved despite challenges associated with the COVID-19 pandemic, further highlights investor trust in Dubai,” Kazim said earlier.
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