“Tenant retention will become increasingly important and can be achieved through competitive rates/incentives,” Asteco said in its latest report.
However, in terms of transaction volumes, the figures are anticipated to rise this year, as more people take a longer-term view of staying in the emirate.
Housing oversupply concerns had been the dominant theme in Dubai for years prior to the coronavirus pandemic. Property prices and rents had been on a declining path and the trend became more pronounced as the economies worldwide grounded to a halt after the lockdown in March.
While new project launches eased in 2020 due to the pandemic, an estimated 24,850 apartments and 9,200 villas were handed over the course of the year. Although slightly lower than the initial forecast of 39,000 units, Asteco said last year’s handovers represent a “significant volume”.
“[It] is also somewhat surprising given prevailing oversupply concerns and the impact of the COVID-19 pandemic,” Asteco said.
Opinions are split as to whether the market has already bottomed out and is on its way to recovery. Last week, Cavendish Maxwell’s Property Monitor highlighted that, after months of remaining in a tight range, prices are strengthening, indicating that the bottom has been passed.
In an earlier interview with Zawya, DAMAC senior vice president Amira Sajwani said declines are expected to continue into 2021, and that a market recovery “will be a long one”.
Asteco said there is indeed optimism for 2021, in line with the global vaccine rollout and rising gross domestic product forecasts.
Apartment and villa rental rates declined by an average of 14 percent and 7 percent, respectively over 2020, according to Asteco. During the fourth quarter of 2020, however, villa rents didn’t show any declines, with some popular communities recording marginal quarterly increases of 2 percent to 3 percent.
Demand for villas went up during the pandemic as some tenants with stable incomes opted to upgrade to accommodations with bigger spaces and private outdoor living areas. Adversely, a number of tenants were forced to downgrade due to salary cuts, redundancies and uncertainties.
As for sales prices, the market continued to see a downtrend, with declines hitting 9 percent for apartments and offices, and 6 percent for villa units.
“Increased affordability and relaxed finance options opened the market to a wider investor pool and facilitated a rise in end-users and first-time buyers with focus on completed quality developments,” said Asteco.
(Reporting by Cleofe Maceda; editing by Mily Chakrabarty)
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© ZAWYA 2021