Dubai: Regulatory changes at both the federal and local levels bolstered UAE’s real-estate markets in 2020, said Knight Frank in a report on Sunday.
“Despite being presented with an unprecedented set of challenges in 2020, real estate markets across the UAE have proved to be remarkably resilient,” said Taimur Khan, Associate Partner at Knight Frank Middle East
“The easing of a number of geopolitical issues over the course of 2020 will also further strengthen market fundamentals,” said Khan.
Apartment prices fall
Residential sales prices in Abu Dhabi fell on average by 2 per cent in 2020, down from 7.5 per cent a year earlier. While average apartment prices fall by 3 per cent, average prices for villas have increased by 2 per cent, the first annual increase in prices since 2014.
Residential rents in Abu Dhabi continued to soften in 2020, with average rents decreasing by 4.3 per cent. Over this period, average apartment and villa rents fell by 4.6 per cent and 2.6 per cent respectively.
“Despite Dubai seeing some of the most stringent lockdown measures in the UAE throughout the early stages of the pandemic, residential demand was relatively resilient in 2020,” said the report.
Initial data shows that almost 33,000 residential units transacted in 2020, down 16.4 per cent compared to 2019. This softer level of demand was largely underpinned by a significant drop-off in off-plan sales, which fell by 32.1 per cent in 2020.
Average mainstream prices in Dubai fell by 7.1 per cent in the 12 months to December 2020
Supply will ease
The consultancy expects new supply levels to begin to ease from 2022 in Abu Dhabi and from late 2023 in Dubai.
In 2020, new launches in both emirates were at the lowest levels since 2004 and 2012 respectively.
“Assuming these trends remain constant, mortgage rates remain at or around historic lows and loan-to-value ratios are kept at current levels, we are likely to see prices begin to bottom out during 2022,” said Knight Frank.