Dubai: UAE property owners and tenants are agreeing on one thing - values are going to decline further. Sharply.
In fact, 59 per cent of respondents in a survey estimate home values to drop in the second-half, while 84 per cent of tenants reckon what they pay as rent will drop.
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According to the poll, "75 per cent who are renters and had renegotiated their lease in the last six months say their rent fell. A third of respondents reported that their rent had fallen by 10 per cent or more."
The survey was done by Peninsula Real Estate and in partnership with Eltizam Asset Management, CBRE, Cityscape and Berkshire Hathaway Home Services. The polling was done over the first two weeks of July and provides a “snapshot of sentiment towards real estate as many of the COVID-19 mitigation measures are being relaxed.”
In all, 2,500 data points were taken on board, including homeowners, renters and investors.
Will this deter new buyers?
If these forecasts do turn out to be true, it could get investors to hit the pause button. Much the same could happen with end-users’ decisions, because the last thing any of them would need is to get caught in a deal where the asset will likely see more value erosion.
“Not surprisingly, our second home sentiment survey has demonstrated poor sentiment towards real estate in the Gulf,” said Dr. Christopher Payne, Chief Economist, Peninsula Real Estate. “No doubt reflecting COVID-19’s impact on an already weak market, 50 per cent of respondents thought the price of their home had fallen by at least 10 per cent year-to-date.”
Fact vs. sentiments
Official data in Dubai suggest that property values have not seen a major erosion in the first six months. But markets sources say that secondary market prices in Sports City, Business Bay and even Downtown have seen marked dips.