Property sales have increased in Dubai, Abu Dhabi and other emirates in the UAE over the past several months, a sign that the coronavirus pandemic has done little to discourage homebuyers. But a new report suggests that much of the demand hasn’t been from investors.
The majority of the purchases (91 percent) have been made by first-time buyers and end users, and only 9 percent of the buyers are investors, real-estate services and investment management firm Colliers International said in a report released on Monday.
From the respondents that Colliers spoke to, 82 percent agreed that mortgage purchases are increasing, and this is primarily attributed to the increased demand from first-time buyers and end users.
Colliers also found that an increasing number of tenants are now looking to invest in a property as the rent and mortgage payment gap narrows.
“Other contributing factors include current low interest rates, reduced loan to value, reduced fees and attractive property prices,” the report said.
The UAE’s property market had been subdued prior to the COVID-19 pandemic and this was primarily due to the huge supply glut. Sales plummeted during the lockdown last year but started to pick up when coronavirus restrictions eased.
As of February 2021, sales transactions went up by 25.2 percent compared to the previous month, with existing ready-to-move-in homes seeing a 21.1 percent increase, according to ValuStrat. However, most freehold apartment capital values have remained weak, declining by 0.6 percent monthly on average.
Several property buyers are keen to spend millions of dirhams to own a good quality unit. Among those polled by Colliers, 44 percent said there was an increase in demand for properties above 5 million dirhams ($1.4 million).
“Since lockdown measures were eased, there had been an increased demand of sales in higher end communities. One of the findings from our research is that investors took advantage of the lower price points prior to the COVID-19 lockdown,” said Colliers.
“This created a domino effect releasing pent up demand from prospective buyers that had been waiting for the right time to buy.”
There is also a demand for renovated units in established communities in Dubai, and for good reason.
“41 percent of those surveyed agreed that there is a demand for renovated and upgraded property. The benefit can outweigh that of a standard property given the favourable bank rates and factoring in time and costs of renovation, reducing the initial outlay of cash,” said Colliers.
However, other buyers are attracted to ready units that have not been upgraded yet. About 59 percent of the respondents polled by Colliers said that properties requiring renovation or in their original condition were more appealing.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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