There is optimism surrounding the property market in the UAE for 2020, as its growth conflicts with global trends. There are several positive indicators which illustrate a prosperous future for the countries property sector. This predicted growth is on the back of five years of declining prices in the real estate industry following a drop in oil prices in 2014. JLL consultancy reported 7% lower prices in apartments year on year since this point, however this is set to change.
An obvious factor is the expected economic boost from the Dubai Expo 2020, which is anticipated to enhance demand for real estate in general, with an additional boost from increased confidence of real estate investors. Additionally, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice president of the UAE and Ruler of Dubai released a document titled ‘January 4, 2020 Charter’. This document conveys a spirit of optimism, spreading reassurance in economic sectors, including but not limited to the real estate sector.
Government agencies and private research centers have produced reports demonstrating a recovery in the real estate industry, as well as expected growth into the year. This could potentially be a result of real estate laws, legislations, regulations and incentives which were all mentioned in the document. H.H pointed out there will be high growth rates, in correlation with high demand for real estate units, such as residential, commercial, or administrative.
This is reflected in a 3.6% predicted growth rate in the real estate sector in a report by Dubai Economy. This report highlights Emirati investors, who were the predominant investors in the Dubai real estate market throughout 2018. The total investment was roughly 10bn AED, and focused around the increase in residential real estate, to accommodate for the growing population.
Additionally, multiple government policies came into effect in 2019, the current growth and predicted growth may be consequences of these changes. Some of these policies include long term visas for investors, which makes the market more easily accessible, and a committee for the off plan market. As a result investor confidence has been boosted.
Having said this, some sources pose differing views about the future of the property market in the UAE. The annual update from core has “conservatively estimated” that a surplus of 49,000 units will be delivered throughout 2020. These are to be predominantly focused in MBR City, Dubailand and Dubai South. This increase in units is set to put “increasing downward pressure on prices due to record supply volumes across all asset classes and the wider global economic and regional geo-political uncertainty.” according to Prathyusha Gurrapu, head of research and advisory at Core.
The report stated that 2019 was the fourth consecutive year of price softening across all asset classes, on average sales and rental price drops are at 8%. Gurrapu stated the “secondary sales market continues to be negatively impacted by surplus handovers” and whilst she admitted her excitement about Dubai being at the “global centre stage during Expo 2020”,Gurrapo remains cautious on the city’s near to midterm outlook.
The Reality
The reality of the situation is that there are varying opinions on the outlook the industry in the UAE. Some remain optimistic, whilst others lack confidence. Be aware that certain articles will only show one side of the story, therefore make sure to research into the entire picture.
If you are considering a move in a time that is uncertain, it is more important than ever to ensure you are making the right move. As a result, Mintaga urges you to make use of our platform of independent property reviews, to gain an invaluable insight into living in areas and residences in Dubai.