Analysts have said that Dubai’s real estate market is beginning to feel the impact of the coronavirus pandemic as widespread restrictions and quarantine measures to stem the spread of the virus kept investors away.
The fast-spreading virus that has now infected more than 3 million people worldwide has triggered a series of lockdowns and travel restrictions. In Dubai, shopping malls and other non-essential commercial establishments were shut down, along with passenger flights, as authorities scrambled to contain the infections.
It was only last week when the government decided to ease restrictions, allowing malls and shops to gradually reopen for business. Several shopping outlets have now resumed their commercial activities, while in the real estate sector, registration trustee offices came back to work with 30 percent of their workforce.
Last March 2020, when the lockdowns were imposed, the off-plan residential sales transactions volume in Dubai plunged 42 percent compared to February, while residential capital values dropped by 10 percent compared to a year ago, according to ValuStrat.
A separate research by Property Monitor also showed that median apartment prices declined 12 percent over the 12-month period from Q1 2019 to Q1 2020. For apartment rents, the decline was 14 percent, while villa and townhouses registered a 10 percent drop during the same period.
“The trajectory of the first quarter of the year has been unlike any other, quickly going from business-as-usual to social distancing measures and restrictions in a bid to contain the spread of a highly contagious virus,” Cavendish Maxwell said in a report.
“At this crucial time, support from authorities has been extended to help businesses across sectors survive and minimize monetary and manpower loss. As the situation continues to evolve, the impact on various sections of the economy, including real estate, is yet to be fully ascertained,” it added.
Haider Tuaima, head of real estate research at ValuStrat, said that it is a bit premature to gauge the impact of coronavirus on the property market. However, he said, the travel restrictions are indeed causing sales transactions to decline.
“Prior to COVID-19 pandemic, the market was on a growth trend in terms of property purchases. For the moment, that trend seemed to be put on hold. It is just too soon to measure what longer impact, if any, the economic consequences of COVID-19 will have on the UAE real estate sector,” Tuaima told Zawya last week.
However, it looks like investor interest is returning, given that restrictions have eased.
“At Mortgage Finder, we have seen a 27 percent increase in mortgage enquiries for last weekend compared to the previous weekend,” said Richard Boyd, director at Mortgage Finder.
“Many of the enquiries are coming from those who are interested in securing pre-approval now in anticipation of buying a property in the next few months. Pre-approval is the first step in the mortgage process and having this in place early in the property search puts a potential buyer in a stronger position when it comes to moving forward with a transaction,” Boyd added.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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