Article published by Arabian Business
On 7 September 2020
Increasingly affordable property prices in Dubai are fueling significant growth in sales activity as residential values drop towards those last seen after the global economic crisis a decade ago.
New figures released by real estate experts ValuStrat show that the average price per sq ft in the emirate this year averaged AED911, just AED13 above those from 2010.
By contrast, prices in 2014 – recognized as the value summit – averaged at nearly AED1,400.
“With increasingly affordable secondary market house prices, August saw a significant growth trend in sales activity over the previous months as well as when compared to August last year. Since the lifting of movement restrictions, home sales transaction volumes in Dubai continued what looked like a V-shape recovery trend,” ValuStrat said in its latest research note.
The real estate sector was already battling sluggish market conditions long before Covid-19 arrived. But the pandemic, in combination with the postponement of Expo 2020, has added further uncertainty, characterized by projects being delayed, and both values and rental yields reflecting the unfavorable climate.
There is also material uncertainty in the sector’s investment market performance, and experts believe this scenario is likely to remain well into 2021.
ValuStrat’s data showed that property values in Dubai declined 1.6 percent monthly in August, which is a 0.3 percent improvement when compared to the April–June movement period when the city was in lockdown.
Annually, residential capital values declined 13.8 percent.
ValuStrat added that all properties it monitored in Dubai saw monthly capital values decline by as much as 1.9 percent, an example of which was apartments in Jumeirah Village Circle.
The least registered capital value declines were found in Emirates Hills, Arabian Ranches, Jumeirah Lake Towers, and The Views.
August’s sales transaction volume performance saw ready homes dominate overall residential home purchase representing a two thirds share versus one third of off-plan purchases.
Compared to the previous month, ready home transactions grew 18.7 percent, forming a V-shaped recovery trend, and when compared to last year, transactions jumped 46.2 percent.
However, due to reduced project launches by developers, August’s off-plan home sales declined 25.2 percent when compared to July.
Properties developed by Emaar, Nshama, Dubai Properties and Nakheel topped the sales charts overall while top off-plan locations transacted during August were in Jumeirah Village, Arjan, International City and Dubai Hills Estate.
Most transacted ready homes were Town Square, Dubai Marina, Jumeirah Village and International City.
Since the global financial crisis, the issue of supply versus demand has been ever-present 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 characterized Dubai’s exponential growth since the 1990s, was the stated the goal of Higher Committee for Real Estate Planning when it was launched by Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, in 2019.
Among its mandates is the ongoing study of the market to ensure that duplication of projects is avoided.