Impact of Covid-19 on Dubai Real Estate

The Dubai property market is gaining speed as the Emirates emerge from a downturn led by the Covid-19 and will boost in the second half thanks to stimulus packages, visa reform and robust demand from end-users and investors, say experts.

The Dubai real estate market has several distinctive traits compared to its equivalents in the other nations of the area. These traits are primary because Dubai is a temporary home for many expatriates compared with nationals, which in turn affects their preferences and considerations in selecting a residential location. These factors generally affect demand in the country. Before the epidemic, the surplus supply in Dubai was threatening real-estate prices both in the residential sector and in the office sector.

• Economic Impact:

From a global viewpoint and with home-based restrictions presently in place worldwide, many business losers will tragically be lost due to lockdowns. However, potential winners and new prospects can assist in offsetting some economic downs.

• Impact on Expo 2020:

Navigating these worldwide issues, World Expo 2020’s primary goal, originally scheduled to open in October this year, was to guarantee the safety and health of the public. The event will be held between start of October 2021 and till the end of March 2022. After two-thirds of the International Bureau of International Exposures (BIE), the Member States have voted for postponement one year from the next World Expo. This is the first World Expo globally, the Middle East, South East Asia and Africa, and the largest ever Expo 2020 would welcome 192 countries to be conducted Dubai.

In the unexpected days of Covid-19, hopeful and gloomy views of the pandemic will affect the immobilizing sector in the UAE were exchanged. However, both types of projections have stated that modernity and inclusiveness will be part of the new market trend. Especially with the crisis due to the excessive offer, using the insights below, developers can help to distinguish themselves from the competition.

• Purchasers priorities

Residents are more likely to choose an apartment where commercial and educational amenities are mixed to avoid going to busy places.

• Renters/buyers priorities

The pandemic forced many people out of their houses to work, adapting from the pre-Covid setup. For example, more and more individuals are increasingly choosing soundproof homes or have a workout space.

• Residents choose lower density houses.

Covid-19 highlighted the risk for residents that high-density properties could pose. Therefore, developers are believed to begin to examine designs that maintain new distance standards.

The preference for well-aired office space is increasing during the medium to long term. According to CBRE, at present, buildings must meet a minimum of 20% fresh air intake, and some prefer to exceed this criterion by going up to 30%. This is expected to change as companies prioritize indoor air quality and ventilation office spaces.

• Dubai Residential Rental Values

Dubai’s residential rental VPI for the first quarter of 2020 was 69.6 points, down 1,7% quarterly and 8.9% annually. Yearly, apartment and villa rentals declined by 9.4% and 8%, respectively. The average annual residential rent in Dubai was AED 86,444, AED 67,371 flats and AED 203,602 villas. Residential net Dubai the average yield was 6.2 per cent, with 6.4 per cent apartments and5 percent villas.

The future expectation in 2021

After 2020, there were several shocks, some pleasant and others wrong. On the one hand, more contagious illness strains have wreaked pandemonium across Europe and America. At the same time, however, several vaccinations of COVID-19 were licensed and started to be distributed, providing hope to the world. The UAE has the second-highest global immunization rate and is on the path to late spring vaccination for the whole population. Moreover, various government initiatives to increase investor confidence were revealed last year. These include new legislative changes in the way personal assets are distributed following the divorce, revisions of legacy legislation, the ability of local operators to have 100% foreign property, the Abraham Agreement (which already has a strong interest in Israeli investors) and, more recently, citizenship for residents that meet specific criteria. The ensuing outlook is cautious and is likely to expand by up to 4 per cent if the epidemic is effectively controlled. The immobilization market is continuing manic-running – at the very high-profile One Palm project, we recently sold two apartments — and look hope to further record-breaking months in the year.