KHALEEJ TIMES, Thursday, Oct 21, 2021 | Rabi Al-Awwal 14, 1443
Expo 2020’s impact on Dubai property to be evident in Q4 2021 onwards
Emirates:
Residential property prices in Dubai are still shy of one-fourth of their
previous market cycle peak of 2014 with Expo 2020’s positive impact becoming
more visible in Q4 this year or early next year, which is accelerating recovery
in the sector, say industry executives.
Zhann Jochinke, chief operating officer of Property Monitor, said the Dubai
property market’s recovery continues as prices rose for the eleventh month in a
row, albeit with the pace of the recovery slowing. In September, prices climbed
1.2 per cent to stand at Dh968 per sqft.
“We are now 19 per cent away from the peak of the previous market cycle. Should
the recovery slow to smaller and sustainable monthly price increases, there is a
greater likelihood of the recovery lasting longer and the possibility of hitting
a new market peak in the current cycle,” he said.p>
Despite the recovery in prices over the last few quarters, property prices in
the emirate are still one of the most affordable when compared to major cities
around the world due to a persistent decline in rates over the years.
The International Monetary Fund’s latest data on global real estate showed
property prices in the UAE dropping nearly four per cent in 2020 — one of the
highest in the world, due to the impact of the Covid-19 pandemic. But the
recovery in the real estate sector is accelerating as new coronavirus cases
dropped to around 100 per day, boosting confidence among consumers and
investors.
Property Finder’s data for September revealed that real estate transactions in
Dubai crossed the Dh100 billion mark in September as the growth of the monthly
sales transactions and their values leading up to Expo 2020 has been phenomenal,
thanks to the presence of a good number of international investors in the
market.
Property Monitor said the effect of Expo opening has not yet been felt in the
market, but will be a positive influence on the last quarter of 2021 and the
first half of 2022 as new buyers discover the Dubai market and its relative
affordability compared to other major capitals and financial centres.
The recovery in the Dubai real estate market has, thus far, been powered by the
strong performance of the villa and townhouse segments, especially in
traditionally sought-after locations.
2021 looks likely to be the best year in a decade in terms of residential
investments, as September transactional volumes already exceeded all annual
totals since 2010, said real estate consultancy and advisory firm ValuStrat.
It said residential capital values saw gains of nearly 10 per cent annually to
reach 72.5 points in the third quarter of 2021 as compared to 100 points in
January 2014.
However, as inventory dries up amid strong demand for villas, a widening
buyer-seller expectation gap regarding pricing is now conspicuous. Aggressive
pricing by sellers and their brokers after blockbuster months for sales have led
to overpriced properties staying in the market as buyers explore other options
rather than indulge property owners’ demands, said Property Monitor.
“We, therefore, expect apartments to carry forward the recovery from here on,
given multiple options available in the market and the greater headroom they
have for price appreciation,” said Jochinke.