“Close to 30 percent to 35 percent of total enquiries received for vacant units in Dubai and around 15 percent in Abu Dhabi were from individuals who have recently moved to these cities or are planning to relocate in the near future,” Savills said in its report.
The influx of new renters, Savills said, could potentially act as “new drivers for residential demand and further [provide a] boost to transactions.”
Rising residential supply has been putting pressure on asset prices in the UAE. Last year alone saw thousands of newly built homes turned over to landlords, with project completions and handovers rising by 39 percent compared to a year earlier.
According to Savills, the increase in deliveries caused vacancy levels across the emirate to go up. It is not, however, clear how many homes are now left unoccupied because of the rising supply.
“Vacancy level considers both old and newly completed developments. [It] would vary across micro-markets and projects, depending on the quality of development, accessibility, flexibility of lease terms,” a spokesperson told Zawya.
New types of tenants
The good news is that, Savills noted, there are still new workers relocating to the UAE, and this will help fill the demand-supply gap.
Data from the Ministry of Human Resources and Emiratisation showed that there were 110,912 more work permits issued in the first nine months of 2019 compared to the same period in 2018. It said the private sector employment in the UAE at the end of the third quarter of 2019 totalled to 5.08 million.
Besides, the recent Global Labour Resilience Index has also ranked UAE first in the Arab world and 21st globally as the most stable labour market.
“This [bodes] well for the long-term growth of the real estate market in the country,” said Savills.
Steven Morgan, CEO at Savills Middle East, said government reforms will also provide added stimulus to the property market. “The government has shown its commitment towards creating a competitive and sustainable economy, which will continue to lead to more policy reform announcements and implementation,” said Morgan.
Market sentiment, government reforms
Morgan expects the overall market sentiment to improve and lead to an increase in uptake in both the rental and sales segments. “The overall market sentiment is expected to improve and lead to an increase in enquiries and transactions, as further clarity emerges over policies and reforms over the next few months,” said Morgan.
In a bid to boost jobs and attract more foreign investors, last year, Abu Dhabi announced certain businesses, including those in agriculture, manufacturing, transport, logistics, hospitality, food services, information and communications, among others, would be eligible for up to 100 percent foreign ownership.
(Reporting by Cleofe Maceda, editing by Seban Scaria)
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