The coronavirus pandemic has caused a marked shift in the financial and living priorities of tenants across the UAE and the Middle East region, with nearly five in ten of them now looking to move out of their homes, according to a new market research.
Many of these occupiers are planning to shift houses to reduce expenses amid widespread income cuts and a subdued economic outlook, Savills said, but there is also a smaller number who are vacating their rented property to upgrade their lifestyle.
Rents and sales prices across the UAE have been on a decline due to a slump in demand. There’s been some home purchases being made in recent months, following the lifting of lockdowns, but the overall landscape remains subdued compared to last year.
“After a prolonged period of confinement, people gradually emerged into a new norm of life, work and play as lockdowns eased across the region. Even though activity levels have bounced back, albeit still lower than pre-COVID levels, a general inhibition towards spending a lot of time away from the home has, in turn, led people to relook at their current residential space,” said Richard Paul, head of professional service and consultancy at Savills Middle East.
“In most cases, this means either relooking their current residential set-up and making necessary upgrades or considering relocating to suit their newfound lifestyle. This has led to a marked shift in how residential spaces are perceived,” he added.
Among the respondents polled, the majority of which are currently renting unfurnished accommodations, 47 percent said they have been considering to shift homes in the next 12 months due to the pandemic.
Nearly 21 percent would be relocating to save money, while 15 percent are looking to downsize their space to save on rent. Only a smaller number (28 percent) are planning to move out in order to improve their lifestyle.
“Given that majority of the respondents currently rent property in the region, price becomes a key determinant when choosing a residential space,” Savills said in its report.
“The onset of temporary salary cuts and redundancies has also ensued a more cautious approach towards spending,” it added.
Most tenants who are planning to move (73 percent) would still prefer to live in apartments, although 25 percent said they would rather transfer to a townhouse or villa development format.
Prior to the lockdown
Residential real estate in the region, particularly in key markets like Dubai, Abu Dhabi, Sharjah and Riyadh, were seeing an improvement in uptake prior to the pandemic, despite rising supply. In Dubai alone, sales transactions went up by almost 10 percent year-on-year during the first quarter of the year.
Demand levels were similarly buoyant in other markets like Cairo in Egypt, driven by a young and growing population and various proactive investments and measures implemented by the government.
In Abu Dhabi and Sharjah, the launch of new projects also led to higher transactions activity.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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© ZAWYA 2020