Despite the deep global crisis caused by the spread of the COVID-19 virus and the ensuing forced restrictions, the Dubai real estate market survived the first quarter of the year quite normally. However, it should be borne in mind that the two first months of the quarter were still relatively dynamic and unaffected by the following crisis, and only in March did the pandemic make itself felt in full.
And yet, the official data released the other day by Dubai Land Department (DLD), the state body in the real estate regulation domain of the emirate, indicate that the total number of real estate transactions completed in the first quarter of the year in Dubai amounted to 14,964, the total value of which is estimated at AED48.21 billion (US$13billion).
At the same time, financial organizations actively participate in the fight against the consequences of the crisis in the sector. As imexre.com already wrote, banks take the borrowers’ side and offer various exemptions and waivers. Therefore, in the first quarter, the total amount of mortgages issued for the purchase of real estate in Dubai constituted 46.2% of the total number of transactions.
Quite a lot of land sales were registered in this quarter in percentage terms, namely 2,689 for a total of AED32.152 billion, of which 1,070 land plots were sold in cash having brought their sellers AED9,179 billion, and the other 1,377 plots were sold using a mortgage funds for a total of AED19.606billion.
As for real estate units, the total amount of transactions in this sector in the first quarter amounted to AED13.181 billion.
In addition, 2,877 entire buildings changed owners in Dubai, bringing their sellers a total of AED1.727 billion of return.
Mortgage-related property sales, as already mentioned, amounted to 46.2% of the total volume of transactions, or AED22.312 billion in money terms, while direct cash sales amounted to 45% of all transactions, or to AED21.639 billion, practically equating mortgage sales and regular sales number in this quarter.
Some government agencies estimate that the COVID-19 pandemic will peak between June and August, and this is why this forecast is used to assess the economic and financial impact on the Dubai property market by various experts.
In 2019, more than 35,000 residential units were delivered, the highest yearly number for Dubai. Based on the completion dates announced by the developers for the current projects, 2020 promised to become another record year in terms of new housing supply, especially given the fact that most developers expressed their intentions to deliver their projects on time, without launching new ones, in order to fulfill all their obligations to their off-plan home buyers. However, of course, the deadlines for the completions of many projects may be delayed for several months due to the crisis, which means that the total number of new housing properties at the housing market may, in fact, be much less.
And regarding housing prices, the experts, for example, Sapna Jagtiani, the director of the real estate rating department at Standard & Poor's, said: “We believe that property prices are approaching the levels that were observed at the bottom of the last cycle in 2010, and even lower, taking into account the inflation and the incentives provided for off-plan buyers by developers.”
As imexre.com reported previously, another agency, ValuStrat predicted that Dubai housing prices will go down to the 2012 level, and the per square feet average property cost will fell down to AED933 10,076 (US$254).
And what the situation with real estate prices and sales will be in Dubai further in this turbulent period, only time and IMEX Real Estate can tell.
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