Sales of apartments and villas in Dubai slumped dramatically during the global lockdown last year. The fall in demand resulted in a huge slump in both property prices and rents, and those who still had high disposable incomes were lured into the market for the first time.
“People who had no problems with salary were finding themselves in a position to buy, and with property prices being as low as they were in 2008, they were making the first step onto the property ladder,” Stuart wrote.
“For example, in 2019, a property could be worth 2.5 million dirhams with a down payment of 33 percent at 800,000 dirhams, but in 2020, the same property could be purchased for 1.9 million dirhams with a down payment of 22 percent, at 400,000. Not only was it a lot cheaper, but clients were also paying less in upfront costs,” noted Stuart.
According to market reports, property buyers were snapping up residential units in the secondary segment. Many were attracted by the idea of owning a home or villa with private outdoor space, as social distancing and remote working became the norm.
“Since the pandemic started, many started to spend more time in their homes. This prompted a new trend and people started to want more space and outside spaces for their family. People also started to migrate away from densely populated centres and towards the suburbs,” Lynnette Abad, director of research and data for Property Finder, said earlier.
Industry experts, however, said it would probably take a year before the market will return to its levels prior to the coronavirus pandemic.
According to Roe, Dubai’s real estate market tends to follow a “herd mentality” and that investors at the moment feel safer parking their savings in options that are tangible.
“Once one person buys and talks about it, they get other people thinking the same and leading to them buying a property themselves,” he noted.
“When it comes to investing money, with the pandemic still very much around, people feel safer putting their money into bricks and mortar – something they can benefit from by living in or renting out but ultimately, something they can physically see and touch,” Roe noted.
He continued that there are still a lot of potential buyers out there that are still waiting for the prices to hit the floor.
“I always tell my client not to wait, but instead, to buy when the market is on the way down. If they wait, they’ll miss the bottom and before they know it, the prices are heading back up. We have seen this in certain communities in Dubai towards the end of the year,” he said.
Analysts have said there will be further declines in rent and sales prices this year, as the market has yet to reach the bottom.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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© ZAWYA 2021