At the end of the previous 2019 year and in the Q1 of 2020, Dubai developers planned to put into operation about 13,216 new residential properties.
However, it is already obvious that, after the pandemic of the coronavirus Covid-19 is over, the number of real estate properties ready for completion by the end of 2020 will be less than in the previous year, due to some slowdown in the construction sector.
In the first quarter of 2020, about 5,000 new housing units were brought to the market in Dubai, resulting in a total of 555,000 real estate units, according to Core Consulting.
“We are seeing a slowdown in the completion of real estate projects compared to the same period last year. Due to ongoing quarantine restrictions, we expect that in the nearest future this volume will be less than expected, since the construction time and supply chain may suffer due to delays and lower demand. In the coming months, most of Dubai’s developers are likely to revise their previously announced supply volumes. Eventually, everything will depend on how long the pandemic lasts, as well as how soon developers can return to their functional capabilities, and both on whether the buyers’ confidence will be impacted while developers adapt to new market conditions,” said the head of research at Core.
Last year, analysts from Property Finder Group estimated that 13,216 real estate units were planned for handover in Dubai by the end of 2019 and in the first quarter of 2020. But, since the actual completion level turned out to be almost 40-50% less, the number of units potentially ready for delivery in the mentioned period dropped sharply to 6500 units.
As for Dubai areas, Meydan and MBR City leaded the way by the number of projects handed over in the first quarter of 2020. They were followed by Dubailand and Al Furjan.
Although real estate purchase inquiries and potential interest from investors and home buyers remained relatively stable, there is still a year-on-year decline in the sales market in almost all categories of the property market.
“In recent months, we have seen double-digit declines in sales, but customer activity remains high,” said Core’s expert.
Secondary market on the rise
Meanwhile, lower interest rates for mortgages and ease of regulation for mortgage payments made by the Central Bank of the UAE managed to maintain high level of sales in the Dubai secondary property market.
Attractive interest rates and a favorable loan-to-value ratio, along with a 5% increase in loan volumes for the first-time buyers in Dubai, are expected to increase the availability of secondary real estate. However, despite such initiatives beneficial for buyers, caution and a potential decrease in income due to the crisis can still make some buyers postpone their purchase decision even in secondary market. But those, who are willing to take risks, may well take advantage of a further decline in property prices during this period of reduced liquidity.
In its latest report published last week Bayut real estate portal said that Dubai's property market showed promising signs of stability in the first three months of 2020. Real estate sales in most popular areas of the emirate were more or less stable, and housing prices in the first quarter of 2020 were on average even slightly higher than in the last quarter of 2019.
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