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Throughout COVID-19 quarantine and beyond many tenants in Dubai and Abu Dhabi spent their last savings on paying rent. March, April and May were hard times for everyone, but the government, developers, banks, and even landlords sought to alleviate the effects of the coronavirus crisis on others and on each other.
For example, in disputes over tenants evictions between landlords and tenants the latter won: all tenants were exempted from eviction for the time of quarantine after the government issued relevant directives in their defense.
Sheikh Maktum Al Maktoum, the Deputy Ruler of Dubai and Chairman of the Dubai Judicial Council, temporarily suspended all eviction decisions related to the rental of residential and commercial properties in the emirate in March and April.
The directive also stopped all “imprisoning decisions” related to rental disputes. This failed to apply only to abandoned houses.
Landlords have demonstrated high flexibility with respect to tenants who have experienced financial difficulties. Many developers and heads of companies called on landlords to be generous and give 3 months of free rent to their tenants, who were losing their jobs. The appeal was only advisory, not mandatory, but many landlords, however, listened and made life easier for their tenants.
Dubai's economy as a whole received government support in the amount of AED1.5 billion over three months of quarantine, while local banks in Dubai were directed to provide support packages for troubled customers.
As part of the economic incentives provided by the Central Bank against the backdrop of coronavirus, the loan-to-value ratio for the first-time mortgage buyers increased by 5%.
The advance payment deposit required to purchase property using mortgage has thus been reduced to 20 percent from 25 percent for the first-time foreign buyers, and to 15 percent from 20 percent for the UAE citizens.
Chesterton’s agency described the first quarter of the year as “resilient” for the real estate sector, as apartment rental prices fell by an average of only 1.5 percent for apartments and by only 1.3 percent for villas, although later these indicators began to grow, making rents more and more affordable.
After governmental measures were taken in March to combat the spread of Covid-19, the impact of quarantine on the residential real estate sector was limited, and the hospitality and retail real estate sectors were no more affected as much as they could be.
Asteco, a research firm, on the other hand, found that annual rent reductions were in double digits, and said it expects the trend for lower rental prices to intensify “in part because of the expected volume of new offers in the short and medium term, but mainly as a result of uncertainty associated with the pandemic.”
According to Chestertons, the number of new real estate properties added to Dubai's housing stock in the 1st quarter of 2020 amounted to 4,458, compared with 6,328 in the 1st quarter of 2019, and 12,369 in the 1st quarter of 2018.
For their part, Asteco experts counted a greater number of finished apartments that appeared on the housing market in the first quarter amounting them to 5750.
"Reducing future housing supply is an important step towards more balanced dynamics of supply and demand and will help maintain long-term investor confidence," the Q1 2020 Observer Dubai Residential Report says.
It also revealed that the previously forecasted 34,000 new housing units, which were supposed to be delivered in Dubai by the year end, will certainly be reviewed, given the circumstances.
And regarding sales, government support to the sector, according to Property Finder, have increased the number of housing transactions in Dubai by 10% per year, and the total number of real estate sale transactions during the quarantine period has reached 10,243.
In March alone, more than 1,209 mortgage sales were registered, which is the highest since October 2019, and is 24.8% higher than in March 2019.
As for housing prices in Dubai, they fell on average by 2% both for villas and apartments during the quarantine period, Asteco reports, but these figures aren’t final.
But only time can tell, and analytical agencies will calculate, what will happen in the aftermath of quarantine, which is already being gradually taken off in Dubai with most of restrictions being removed. And IMEX Real Estate will certainly tell you everything about it in future publications.
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