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Property prices in Dubai continued to increase slightly, while loans hit a record high in recent weeks, a sign that the market is bouncing back from the coronavirus slump, a new report revealed.
Prices for apartments and villas across the emirate registered an average increase of 1.5 percent in December compared to November, according to the Property Monitor Dynamic Price Index. In the same month, mortgage transactions hit a record high of 2,192.
“Our predictions of having reached a market floor in Q3 2020 has proved accurate,” the real estate intelligence platform said in its report.
“After a marginal increase in prices during the month of November, property prices continued to display signs of recovery and a return to growth in December.”
Still subdued
However, the property market remains subdued compared to 2019, with total transaction volumes for 2020 still lower by 13.5 percent compared to 2019.
As of December 2020, prices of residential units in Dubai stood at 833 UAE dirhams per square foot, down 32.5 percent from the market peak in September 2014.
Property Monitor said that the rates are now 6.1 percent away from the market trough of April 2009 and at levels last recorded in June 2009, when they were at 831 per square foot.
Still, Property Monitor maintained that the market is showing signs of resilience and that it is on its way to recovery. This is thanks to the recent peace accord between the UAE and Israel, along with other positive developments that have stimulated international visitor arrivals in the country.
“The recent peace agreement between the UAE and Israel seems certain to lead to a flood of new visitors from the latter – many of them will be actively looking for opportunities especially in the real estate sector,” Property Monitor said.
Slower pace of decline
“In December, our bullish view is further supported by the data which shows a dramatic slowing in the pace of decline in 2020 compared to previous years,” the firm said.
It pointed out that a year-to-date decrease in prices of 3.4 percent was recorded in the 12 months to December 2020, an improvement compared to the 12.9 percent fall for the same period in 2019.
Also, the month of December recorded 3,772 transactions, up by 25.5 percent compared to the same month in 2019.
“Overall, the sector has displayed resilience in the face of the pandemic, helped by government measures and with movement restrictions triggering people to upgrade their living spaces,” said the report.
“We expect transaction volumes to maintain their upward momentum as long as quality and well-priced ready inventory is available to fulfil strong buyer demand.”
Analysts are split on whether the market is on the road to recovery. While Property Monitor claims that the real estate sector is bouncing back, other industry sources suggest that there will be further declines not just in sales prices but also rents this year.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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