Oversupply In The Real Estate Market Of Dubai Makes It More Buyer-Friendly
In the first half of 2019, the property prices in Dubai showed a decline. Also, for the second half of 2019, this trend will be seen. This happens due to oversupply in the industry. So, the property market of the UAE will be buyer-friendly for next a few quarters-but not years.
Prices in the sales market showed a reduction by 4 percent for both apartments and villas. However, the rental sector showed more weakening in comparison to last period. The average apartment decreased by 5 percent. This figure for villas was 8 percent quarter-on-quarter. Consequently, property options increased leading to lower prices.
The number of apartments, townhouses and villas in Dubai is estimated to double compared to last year. This year 47,500 properties will be delivered.
Nick Witty, managing director of Chestertons Mena, has said further decline in both markets should be expected. This will happen due to oversupply in both the sales and rental markets.
He also said that the most important point here is that Dubai tends to be a buyer-friendly market. This will continue in the not-too-distant future. The reason is that the supply overweigh the demand in this industry.
He also added that what is expected is a flight to quality. In this kind of market, tenants and buyers will put their focus on the best properties. For instance, they may choose the most desirable location, the highest quality design or the widest range of amenities in those properties.
He believes in the short term, oversupply may cause dampen in the value of Dubai’s real estate.
The five-year payment plans, fixed property service charges and guaranteed rental returns make the market more buyer-friendly. Also, registration fee rebates will accentuate the situation. As for the rental market, landlords suggest rent-free periods, different rent cheques and also short-term leases making the situation worse.
The developers also have been increasingly creative in order to compete with their opponents. For instance, Emaar suggests buyers of Executive Residences in Dubai Hills Estate a three-year business license. The business license is renewable and give the residents the chance to get visa and 100% business ownership. Emaar has done this in partnership with the Dubai Multi Commodities Center.
According to the Property Monitor Data, the prices for residential buildings showed a decline. The rate of decline was faster in May. The prices for apartments declined by 14.1 percent year-on-year. While the figures for villas was 14.9 percent year-on-year. Besides, BIS data showed a trend like this.
Haider Ali Khan, CEO of Bayut, said in the first half of 2019, the Dubai real estate market has been dynamic.
According to Khan, the prices in the real estate market of Dubai has continued to drop. This has been the result of the announcements for long-term or permanent residency visa. Dubai is an option which is really competitive. In comparison to other big cities like Singapore, London, and Sydney, Dubai is the most affordable one. However, it gives people similar standard of living as in those cities.
So, now is the best time for consumers. This is because they can enjoy returns. Plus, there are some flexible payment plan in Dubai that cannot be found somewhere else, literally. Apart from these, some measures of the UAE government make Dubai really favorable for expats. They will consider this city as a long-term option. It leads to more investment in the real estate market of Dubai.
A survey of investors and residents has been recently done in Dubai. The survey revealed that the UAE government scheme toward long-term residency has had a positive influence on the investment community.
Also, another survey showed that existing investors are more interested in investing. But potential investors are more open to invest in the real estate industry.
Another survey was done by Lootah Real Estate Development. This survey indicated that Gold Card scheme has had a positive impact on the investments. This is because about 79% of investors in the UAE have decided to invest more in this industry.
According to Saleh Abdullah Lootah, CEO of Lootah Real Estate Development, permanent residency is a great step by the government. The reason is that it will cause more stability in the UAE’s economy. The real estate market will be influenced more. Foreign investors and expats are increasingly interested in buying properties in this country. This leads to a boom in the real estate market of the UAE.