Dubai’s real estate market has been reeling from the effects of a slowing economy and oversupply of residential units. Even as the market tries to fight this double-whammy, there’s hope on the horizon.
With the introduction of new visa regulations for retired expats and skilled workforce, investor sentiments are expected to improve. The emirate’s most-awaited mega event — Expo 2020 — is also just a few months away. As the anticipation for hosting this event builds up, the real estate sector is likely to benefit from the positive sentiment pervading the market.
Favouring buying at the dip
Dubai’s real estate market has come a long way from the crash of 2008 and has slowly evolved from an investor’s haven to an end users’ market. This change in the market dynamics has been further marked by steadily declining prices over the last two to three years. If we analyse data, the overall residential capital values for existing freehold properties declined nearly 11 per cent annually and over 22 per cent below their 2014 peak levels.
The rationalisation of prices has been further aided by an influx of new residential stock that was recently handed over. A large number of these new homes are catering to the mid-affordable market, and this new supply has had a definite impact on areas that fall on the E311 corridor such as International City, Dubailand and Dubai Silicon Oasis.
But luxury realty still shines
Dubai is today counted among the most affordable markets for luxury housing among all world cities. Declining prices have only added to the appeal of luxury properties that continue to fare well in micro-markets such as on the Palm. The demand for villas, town houses and mansions has shown a notable surge in the last few months.
Price correction has also given a chance to residents and investors to bargain for a good deal and thus afford the house of their dreams.
The Expo ruboff is imminent
There is likely to be an overall revival in business confidence that will impact the property market positively. Dubai is all set to host this mammoth event that will be attended by 25 million visitors from 190 countries.
An event of this scale and magnitude will also require accommodation for visiting delegates translating into demand for more hotel rooms and serviced apartments. The overall economy is set to receive a major boost from Expo 2020 and that should bode well for Dubai’s real estate sector too.
Dubai realty market is witnessing a market correction as property prices are adjusting to the increased new supply. With additional units expected to hit the residential market in the coming months, buyers are in a unique position to negotiate better prices.
As prices are yet to bottom out, more and more UAE residents are likely to invest and buy properties as an alternative to renting.
Shajai Jacob is CEO — GCC at Anarock Property Consultants.