In first quarter of 2020, apartment prices in Dubai on average plummeted 12 per cent
Decline in new property project launches as well as slower deliveries will help cushion prices from further fall, according to real estate consultants.
"Several developers have slowed down project launches and have chosen to instead focus on completing existing projects. For second quarter and the remainder of 2020, delivery of new units is expected to be impacted as many construction companies, contractors and suppliers temporarily suspended activities from March as a precautionary measure against the further spread of Covid-19. Fewer new launches and potential delays in handovers of existing projects may constrict supply overall, providing support to prices and rents in the upcoming quarters," Cavendish Maxwell said in its latest report.
So far, only a couple of property developers have launched projects including Danube Properties and Sobha Realty.
Aditi Gouri, associate partner, at Cavendish Maxwell, said the proactive stimulus measures introduced by authorities, including improved loan-to-value ratios for first-time homebuyers, will help enhance resilience and enable the sector to quickly recover from this situation.
Analyst believe that Expo 2020 delay for a year will also prove a boon for the real estate in the form of increased transactions when the prices are also on a faster recovery track in 2021.
"It is quite unfortunate the Expo is now likely to be postponed at a point in time where momentum was clearly gathering. However, this will provide an opportunity for the Ccovid-19 affected construction sector to complete pipeline projects prior to the re-scheduled Expo launch. The Expo positivity should also coincide with a strong rebound in transactional activity once the pandemic is contained and Dubai should generally be better prepared and equipped to host an optimal event from October 2021," said Murray Strang, head of Dubai Office at Savills.
Q1 2020 performance
In first quarter of 2020, apartment prices in Dubai on average plummeted 12 per cent with most of the areas witnessing decline between one to 23 per cent. But Dubai South (Dubai World Central) and Mohammed Bin Rashid City bucked the trend where prices rose 16 per cent and 15 per cent, respectively.
According to Cavendish Maxwell's first quarter of 2020 report, communities such as Dubai Silicon Oasis, Palm Jumeirah and Liwan registered declines of over 20 per cent during the Q1. However, new and emerging areas such as Dubai Hills Estate, Dubai Creek Harbour and Al Jaddaf are seeming even more attractive now as prices are under pressure especially considering the superior quality of infrastructure in these new areas, said the report.
"The first quarter of the year has been unexpected for all, quickly going from business-as-usual to social distancing measures and restrictions which have impacted economic activity. Fluctuating crude oil prices also added uncertainty to the mix in March but there have since been hopes of achieving stability. Naturally, business activity across sectors has been affected by these developments and real estate is not immune to the universal challenges," said Aditi Gouri.
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