Demand for real estate in the UAE sunk during the global coronavirus lockdown early last year. Sales transactions and delivery of new units started to improve only after the restrictions eased.
Low prices enticed buyers to flock to the market during the late part of 2020. November and December, in particular, saw “both breaking the secondary and ready market transactions records” for the past seven years, according to Property Finder.
More housing supply
JLL’s report noted that as of the last quarter of 2020, Dubai and Abu Dhabi have a combined residential stock of 860,000 units. An additional 68,000 units are expected to be delivered this year.
“After various lockdown measures put construction activity on hold in the first half of the year, [the second half of] 2020 saw a rapid recovery in residential project handovers,” JLL noted.
For the whole of last year, Dubai witnessed the handover of 39,000 residential units, thereby increasing its supply to 595,000. Abu Dhabi, for its part, saw 4,000 new units delivered in 2020, raising its stock to 265,000.
For years prior to the coronavirus pandemic, the property market in the UAE has been witnessing a decline, owing partly to a huge supply glut.
Sale prices, rent
In terms of sale prices and rental rates, Dubai registered declines by 8 percent and 12 percent, respectively in the last quarter of 2020 compared to a year earlier. Rents also dipped by 12 percent year-on-year.
In Abu Dhabi, sale prices and rental rates fell by 4 percent and 3 percent, respectively.
“While we remain cautious in our outlook and can expect further single-digit declines in performance in the short-term, particularly on the back of an oversupply in Dubai’s residential market, the sector is generally defensive compared to the commercial market. Therefore, activity is unlikely to drop significant,” JLL said in the report.
The sentiment, JLL noted, is supported by the raft of reforms and the changes to personal and social laws, such as the ten-year and five-year residency for expatriates and amendments to social and family-related rules.
Amira Sajwani, senior vice president at DAMAC, told Zawya earlier that it may take a year or two for the market to bounce back and return to pre-crisis levels.
However, what will help drive the industry forward this year, JLL said, is sustainability and tech adoption.
“While uncertainty persist in the New Year and the recovery will vary across sectors and industries, accelerating capabilities and focusing on sustainable performance can redefine business success,” said Dana Salbank, head of research, Middle East and North Africa, at JLL.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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© ZAWYA 2021