Despite all odds such as disruptions caused by Covid-19, Dubai’s realty sector is showing no signs of holding back. The city is soon expected to add 39,000 units in 2021. This will be an increase of 8% from 2020. In 2019, Dubai witnessed 31,000 residential units which include: 23,600 apartments and 7,400 villas.
The foremost factors driving the demand of units include – improvement in buyer’s confidence, positive market sentiments, and decline in the property prices. As the industry is rapidly changing with continuous revisions in the forecasts, the developers are making efforts to adapt to the new normal.
The government is playing a decisive role in boosting the demand for property. There has been an exhaustive list of initiatives being launched by the government to spur the demand of the property such as – co-habilitation laws, FDI Laws, lower interest rates, Expo 2020, Golden visa reforms, and resuming the Trade Relations with Qatar. These remarkable steps have led to the development of resilience in the secondary market with an exponential rise in the transaction volumes, majorly by end-user buyers. In 2021, the secondary sales transactions are likely to be robust as the underlying demand is backed by lower capital values, flexible visa rules, and social & financial reforms.
The Impact of Covid -19:
Covid-19 disrupted the price recovery initially, however not for long. The market bounced back strongly with a surge in sales prices with values reaching the development costs in several districts. There has been a colossal rise in the demand for villas as buyers are looking for spacious properties with open areas. However, meeting the rising demand for villas looks challenging for real-estate companies.
The real-estate sector is still in the process of reviving from the headwinds caused by the coronavirus. Sales prices have started to witness resilience as in many districts value has reached development costs.
Apartments are yet to reflect a promising future. A steep decline in the demand for the apartments will lead to oversupply which will hurt the prices. The rental values are most likely to stay low throughout 2021.
The Worst Hit Areas in Dubai:
The areas with apartment districts have received the biggest blow at prices. This includes – Downtown Dubai (-4%) and Palm Jumeirah (-4%).
Discovery Garden (-15%) and Dubailand (-15%) have been the weakest performing areas in Dubai in 2020.
Compared to the figures of 2014 when the prices were at their peak, villas dropped by 31%, and apartment districts dropped by 35%.
A Big Sign of Relief:
The good news for the UAE real-estate sector is that despite all hurdles which came in the way in 2020, there has been a surge of 7% in secondary market transactions compared to 2019 figures. The credit goes to low buying costs and favorable government policies. The last two months (i.e. December 2020 & January 2021) experienced the highest monthly transaction volume since 2018 due to multiple restrictions imposed by the government on the movement.
There has been a decline of 32% year-on-year in the demand for off-plan properties in 2020 as buyers are not in a mood to take any more risk and prefer to buy ready-to-swift properties. This is leading to several big property market players scaling back on new projects due to lack of demand.
Dubai Welcomed Twelve New Skyscrapers to illuminate its skyline:
Dubai’s iconic skyline welcomed 12 new skyscrapers over 200 meters tall in 2020 under the Covid era. This will boost the investor’s confidence and accelerate the pace of the construction sector in the region.
Globally, 106 skyscrapers of 200-meter-plus were constructed in the year 2020 compared to 133 in 2019. The experts hold Coronavirus responsible for this decline as construction work remained closed for most of the year.
China accounted for more than half of the total skyscrapers of 200-metre-plus constructed in 2020 with a figure of 56, followed by Dubai with a figure of 12. The US was at the third spot with 10 skyscrapers, and the UK with 5 skyscrapers.
The tallest building to be completed in 2020 was Central Park Tower in New York City at 472 meters.
Tallest Buildings Constructed in Dubai in 2020:
The Fate of UAE Real-estate Sector in 2021:
According to Global Data, the construction output growth forecast for the Middle East and North Africa (MENA) region will be 1.9 % in 2021 and 4.1 % in 2022. GlobalData still maintains its forecast for construction output growth in the UAE with a rebound in 2021 of 3.1 % and a promising medium-term outlook.
The experts believe that the construction sector will witness slow growth in 2021 after the havoc caused by Covid-19 in the UAE. The approval of the new Dubai Building Code is certainly positive news for the sector as it outlines a new set of construction rules with a major emphasis on reducing construction cost.