The start of 2020 has involved contrasting opinions on the outlook of real estate in Dubai. JLL are casting a positive outlook in their annual report for the UAE real estate market in 2020. Declining rates that have persisted over the past two years are expected to flatten at the start of the new decade.
Apartment and villa rents and sales have declined in the UAE in 2019. According the JLL, the average rent of apartments and villas have fallen by 8%, whilst apartment sales decreased by 5%. In the same period villa sales fell by 10%. This is at the end of a five year decline following an initial drop in oil prices, coupled with ongoing concerns about oversupply of properties.
However, analysts from JLL argue that new government policies as well as the Expo 2020 Dubai event will provide a much needed spark in the market.
September saw the formation of a higher committee for real estate planning, which is headed by His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai. This committee consists of numerous senior property developers, its primary aim is to provide a supply balance throughout the United Arab Emirate property market. They intend to do this through enhanced collaboration between private sector firms and government-related entities.
One of the policies introduced include a new 10-year visa option for investors and professionals, which aims to encourage investment into the UAE. Other reforms saw the Real Estate Regulatory Agency being given responsibility to oversee the development, brokerage and management of Dubai property. The Land Department on the other hand will register rental contracts and regulate the relationship between owner and tenant.
A new house price index uses Dubai Land Department data, in partnership with Property Finder to provide consumer insight into up to date sales prices in Dubai. Mo’asher first data point last December showed a 1.4% data rise, which is positive compared to other sources.
Expo Dubai 2020 is demonstrating glimmers of hope as well. The expo is said to bring in 25million visitors to the Emirate, which arguably could bring significant investment to the UAE property sector.
Despite this, the issue of oversupply in the market still remains. In 2019 there were 35,000 residential units handed over in Dubai, an annual record. 2020 is expected to exceed this, 83,000 units are scheduled to be in delivered throughout the year. Although experts predict the real number is said to be far less than this. Alongside this, the newly formed Real Estate Planning Committee have taken steps to limit future supply, through launching less projects, instead prioritising the sale of existing inventories.
There is an argument that excess supply in Dubai’s property market is making it more affordable for renters and buyers. Property group Savills estimate the new number of homes to be around 40,000. When this is combined with growing numbers of residents and higher transaction levels, it is said to place more downward pressure on pricing and rents. The report by Savills showed supply pressure forcing down apartment prices by 10% in areas such as JBR, JLT and DIP. Apartment rents also fell between 4-8%.
The continued concern around oversupply has the potential to push down prices throughout 2020. The argument surrounding government policies may counteract this. The question remains, have they come soon enough?
Regardless, in a time of confusion and uncertainty, it is more important than ever to ensure that consumers are making the correct decisions within the real estate industry. Therefore we urge you to use mintaga.com , the platform of independent property reviews, to gain an invaluable insight into an area or residence before making the move.