While Expo 2020 continues to generate buzz around Dubai and the wider UAE, tens of thousands of new construction projects are underway. Aron Lomax, Managing Partner of the Dubai-based real estate company Treo Homes, believes that 2020 will be “most hyped and talked-about year in the real estate industry’s short but incredible history.” But what does all of it mean for the industry?

THE BIG ONE: EXPO 2020

First, the “Greatest Show on Earth” will take centre-stage in Dubai this autumn, and Lomax says that it will have a huge impact on the real estate sector.

“How will Expo 2020 affect the market? How can the industry take advantage of the world’s greatest show? Can it stabilise prices? These are just a few of the questions on many stakeholders’ minds,” Lomax told Zawya. “With an estimated 25 million visitors expected specifically for the Expo, there is no shortage of people coming to the city. It has created a buzz and excitement around both the city and the Expo that is infectious.” 

MORE RESIDENTS AND TENANTS IN THE LONG-TERM

It is hard to quantify how many of these 25 million visitors will turn into residents of the country or will decide to purchase property here.

“I believe 2020 will have an incredible impact on both the economy and the property market; however, it is going to take anywhere from two years for us to truly see the effects of it,” Lomax said. “I do believe that of the visitors coming for Expo, there is going to be a significant number who will love what this incredible city has to offer, how much value is on offer here, and will choose to take residency here. This is, however, going to take years to come to fruition.”

He continued: “Even if […] 1 percent of the visitors decide to relocate here, this is enough to soak up all of the future planned supply. It is up to all stakeholders at every level of the chain to capitalize on this once-in-a-lifetime opportunity.” 

BUYING OFF-PLAN

According to Lomax, Expo 2020 could also have an impact on off-plan housing. “Dependent on what Expo-related offers the developers in the city can offer to visitors, we may well see a short-term spike in off-plan transactions, which will be a welcome boost. However, what the market needs right now is an influx of end-users to soak up the new supply coming into the market.”

AFFORDABLE HOUSING

Apart from Expo 2020, Lomax said a key trend in 2020 will be affordable housing. “This is a sector that previously did not exist only a matter of three years ago and has seen an outstanding boom in transactions, handovers and new launches. This is [giving] families and young professionals who were previously limited to the apartment market open access to a variety of new affordable communities such as Arabella, Town Square, Mira, Mira Oasis, Damac Hills and Dubai Hills. This trend is here to stay and will dominate secondary market transactions in 2020.” 

A CONGESTED MARKETPLACE

As developers rush to enter the affordable housing space, there is now an abundance of similar types of properties entering the market, “all at a similar price point, similar location, similar size and competing for a very similar demographic,” says Lomax. “Although this is a sought-after segment of the market, it is difficult to create enough demand for them all, thus creating a micro-market of over-supply.” 

DECLINING RENTS

According to Property Monitor, there are 50,000 new units in projects already under construction that will hit the market in early 2020. More units means more choice and more competitive rates for tenants.

Asteco Property Management is one of the local real estate agencies that predict rents to further reduce in 2020. 

TIME TO BUY

Expanding and more relaxed payment purchasing plans means 2020 will draw more interest from those wanting to buy instead of rent and from those looking to invest in Dubai’s real estate sector.

According to the Property Monitor Dynamic Price Index, an online tracker of real estate price trends across Dubai, properties have become increasingly more affordable. With the UAE implementing a new system for long-term residence visas, many residents looking to stay in the country for the long haul could start snapping up properties in 2020. 

MORTGAGES: A TOUGH OUTLOOK

However, Asteco Property Management predicts a less-than-sunny outlook in 2020 for developers and those who have existing mortgage commitments, as capital values are not expected to plummet any further. 

RENT PAYMENT SHAKE-UP

For those who prefer more flexibility when it comes to housing, there is good news for renters as well, in the form of new rent payments terms. Asteco Property Management predicts that direct debit monthly payments will be a trend for 2020 in place of tenants having to fork over lump sums for rent payments.

(Writing by Jennifer Bell, editing by Seban Scaria seban.scaria@refinitiv.com)

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© ZAWYA 2020