BOOMING STATE OF REAL ESTATE IN DUBAI
BY EXCEL PROPERTIES
Despite the global pandemic hitting the global financial state, Real estate activity roars as Dubai property prices slip to near 2010 lows. The real estate sector was already battling slow-moving market conditions long before Covid-19 arrived but, the pandemic, as well as the postponement of Expo 2020, has added further ambiguity, portrayed by projects being delayed, and both values and rental profits reflecting the hostile situation.
The recent new data suggests increasingly affordable property prices in Dubai, which are fueling significant growth in sales activity. As per the latest August’s sales transactions performances, ready homes dominated the overall residential home purchases representing a two third share while one third was of off-plan purchases.
“Compared to the previous month, ready home transactions grew 18.7 percent, which makes it to 46.2 percent increase annually when compared to last year.”
Supply vs Demand
Since the global financial crunch, the problem of supply versus demand has been omnipresent in the sector. Finding the right balance between supplying only units the market needs, and thus maintaining real estate values, and the build-it-and-they-will-come philosophy that has branded Dubai’s exponential growth since the 1990s, launched by Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, in 2019.
The UAE’s largest real estate website revealed demand has shifted from traditional small family apartments to the secondary villa and townhouse sectors. Also due to reduced project launches by developers, August’s off-plan home sales declined 25.2 percent when compared to July.
Figures released on 19th August showcased that July witnessed the highest number of sales transactions of ready villa/townhouses in a single month (i.e 493) also taking the number of transactions in July up by over 58 percent compared to the same period last year.
Another trend in the real estate market in Dubai has been the change in demand from smaller units to larger units. The ratio of sales transactions for 1 BR units has tumbled by over 10%, and for studios by more than 34%, while the demand for 3,4 & % BR has increased by 9%, 20% & 15 % respectively.
Residential sales transactions grew by 64 percent from May to June as restrictions across the country eased. Dubai alone registered real estate transactions worth AED4.72bn ($1.3bn) in the month, which plunged by 12.92 percent year-on-year from AED5.42bn ($1.5bn) in the same period last year.
According to the overall market conditions and requirement we see that a trend of what the average person is looking for, are brand new units due to the large amount of completed supply, and chiller free units to save on extra costs
It is important for landlords to demonstrate flexibility on rents and payment terms in this climate. Office space requirements are expected to shrink as remote working becomes increasingly common.
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