Why this is the best time to invest in Dubai property market
According to analysts, residential property supply is predicted to experience a rise in Dubai in 2020. This will lead to keep prices and rentals under pressure. Also, it will attract more cost-conscious buyers because of higher affordability.
Real estate research firms say that almost 50,000 units will hit Dubai this year. As 2020 will be a pivotal year for economy and the real estate market of Dubai, decline in prices and rentals will be slow compared to last year.
According to property analysts, 2020 will ascertain where the property market of Dubai stands now in terms of balance of supply and demand. It also will set the direction of prices and rentals in the future.
Aditi Hariharan, associate partner for strategic consulting and research at Cavendish Maxwell, has talked about tangible measures taken to decrease oversupply. Some of them include the formation of the Higher Committee for Real Estate Planning and slowing down new launches and focusing on projects under construction.
Within the first six months of the year, Hariharan expects more than 50,000 units of residential supply to enter the market. This is because developers hand over projects that were delayed in 2019. This factor can cause the prices to decrease.
According to Zhann Jochinke, chief operating officer of Property Monitor, the drop in prices has attracted many buyers to the real estate market of Dubai.
He also pointed out that prices are hitting a floor. However, other indicators such as the expected upcoming supply as well as high vacancy rates can result in stabilization. Besides, it is interesting to note that Expo 2020 will be another indicator of where Dubai stands in terms of supply and demand.
Prathyusha Gurrapu, head of research and advisory at CORE, has said that in this market, prices keep on decreasing because of record supply volumes in all asset classes. In addition, regional geo-political uncertainty and the wider global economic are other causes.
Expo 2020 will place Dubai at the global center stage. The Expo will benefit Dubai in terms of tourism, population growth and investment inflows. Expo will bring enormous benefits for Dubai’s real estate as well.
According to her, as leasing incentives are predicted to continue, landlords are flexible in order to maintain occupancies. These incentives include contributing to utilities, refurbishing units and rent-free periods and longer contract terms. Dubai is also witnessing a rise in the number of cheques that are becoming a norm. This rise has been in the lower to mid-market segment.
According to CORE, the average drop in year-on-year sales price has been over 8 per cent and rental drop has been over 9 per cent in 2019.
Gurrapu has also said that downward pressure on both rentals and sales prices would continue this year. However, in 2020, the market is expected to be more occupier friendly. This is because a steady rise in transaction volumes is expected for the year 2020.