Markets with strong purchasing power targeted to offset absence of China amid Covid-19 crisis
Property developers in Dubai are heavily focusing on investors from the UAE, GCC, Russia and other markets with strong purchasing power to offset the fall in demand from Chinese buyers as well as impact of coronavirus.
Developers are laser-focused on local markets, who noted that young Emiratis are buying in droves to cash in on attractive prices, believing that these will recover in the short term.
They are also looking to benefit from rental incomes.
"My mix of buying is still good whether it is the Subcontinent, Africa or London. Chinese investors used to be a good number of buyers but thanks to coronavirus, they have not been investing in the last two months for obvious reasons. Our sales target has not been affected, which means we're making inroads into new geographies. The other nationalities have increased: Africa is showing a lot of interest, Russians are coming back to market. We're getting better response from London, India and the GCC," said Jyotsna Hegde, president of Sobha Realty.
"There are a lot of young people in the UAE who are buying, which is driving demand for smaller units because first-time buyers opt for small units. There are a lot of end-users now among the young Emiratis," said Hegde.
Atif Rahman, director and partner at Danube Properties, believes the effect of coronavirus on Chinese buyers is only a temporary phenomenon.
"Most Chinese real estate investors come from Shanghai, Beijing and other metropolises. So, the real impact is minimal. However, it is the psychological impact that is affecting businesses more. Besides, all our projects were sold out by December 2019 - so we had our fair share of the Chinese investors in our portfolio," Rahman said.
"By now, China is recovering from coronavirus and we expect them to be the first nationality to re-enter the market. Confidence among the Chinese investors is coming back," he added.
Dubai witnessed strong property transactions volumes in the first two months of 2020. According to Property Finder, overall transactions grew 12 per cent year-on-year during January and 33 per cent in February. Off-plan transaction, meanwhile, jumped incredibly 76 per cent, real estate portal Property Finder said, quoting Dubai Land Department data.
Global Property Guide, meanwhile, showed that the decline rate in Dubai property prices has halved, meaning prices are set to plateau soon and then recover.
The UAE's housing market is gradually recovering amidst strengthening economic growth. In Dubai, residential property prices fell by 4.05 per cent during 2019, an improvement from year-on-year declines of 8.22 per cent in 2018 and 5.23 per cent in 2017. During the latest quarter, house prices in Dubai fell 1.5 per cent quarter-on-quarter.
The UAE's overall economy grew by 2.9 per cent in 2019 from a year earlier, an improvement from the prior year's 1.7 per cent expansion.
"The Dubai market is matured enough to adopt very fast with the current market trends. Last year, we successfully opened up to abroad market attracting many new investment destinations. By far the year 2020 seems to be local buyers and in real estate dictionary we call it a 'buyers' market' as prices are very attractive to buy, which allows developers to target and focus local base audience," says Salah Omar, marketing and PR director of A1 Properties.
Omar noted that many developers have started diverting focus towards local buyers, offering attractive prices and payment plans, reducing service charges, waiving registration fee as well as the commission.
During the start of 2019, Firas Al Msaddi, CEO of fam Properties, said Chinese investors were also among the top four foreign nationalities who invested in Dubai, which clearly showed there was heightened interest from Chinese investors in the city's real estate market.
Al Msaddi believes that the coronavirus crisis has really hit all international buyers hard, because of the slowing down of their movements and logistics of course.
"Developers in Dubai are focusing on local purchasers offering rent-to-own schemes and maybe long-term payment plans. They are becoming more flexible with their offerings with the laser focus on the local market. But that is not going to last forever, of course. I think the coronavirus phase has to end, despite whether it has to get worse first then end or it ends tomorrow," said Al Msaddi.
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