UAE property activity picks up, but prices still…

Eudore R. Chand

DUBAI 29 November 2020: Slowly but surely, stability continues to be achieved in UAE real estate as market activity resumes and consumer confidence is restored, according to Cavendish Maxwell, a leading property consultancy and chartered surveying firm.

The biggest indicator of this is the spike in property transaction levels in Q3 versus the previous quarter, as investors and end-users act to secure quality spaces at attractive prices, said Aditi Gouri, head of strategic consulting and research at Cavendish Maxwell.

However, capital values remain under pressure in areas with excessive existing or upcoming supply whilst the more sought-after communities are experiencing stabilisation in prices, and even appreciation in certain cases, she said commenting on the firm’s latest report.

“The pandemic has changed preferences from living to shopping as people choose bigger and more open spaces to live in and increasingly adopt e-commerce as a preferred means to shop and dine. Property developers and operators across sectors must be aware of these changing preferences and will likely have to alter or repurpose upcoming project offerings.”

Dubai

The Q3 2020 UAE Property Market Report revealed that average residential property prices in Dubai declined 11.7% over the 12-month period from Q3 2019 to Q3 2020 and 4.6% on a quarterly basis.

Average apartment rents declined 15.9% over the 12-month period from Q3 2019 to Q3 2020 and 5.9% on a quarterly basis whilst villa/townhouse rents were lower by 8.9% on a yearly basis and 2% from the previous quarter.

Only a few projects were put on hold during the pandemic and approximately 16,400 units are planned for delivery in Dubai by the end of 2020. However, final numbers will depend on the actual materialisation rate achieved.

Abu Dhabi

Average sales prices declined in Abu Dhabi’s major residential zones by 5.6% for apartments and 5.3% for villas/townhouses since Q1 2020, outperforming Dubai.

Rents in Abu Dhabi registered declines in Q3 2020 for both apartments and villas/townhouses. The average decline was 6.1% for apartments from Q1 2020 to Q3 2020 compared to 6.2% for villas/townhouses.

Scheduled upcoming supply in Abu Dhabi for 2020 is estimated to be over 6,100 apartments and 450 villas/townhouses in both, investment zones and Abu Dhabi City. However, actual materialisation may be lower due to project delays and staggered and phased delivery by developers.

Northern Emirates

During Q3 2020, residential rents across the northern emirates continued the declining trend from previous quarters.

Office Market: The office market in Dubai is likely to remain under pressure in the near term as many companies are yet to resume operations at pre-pandemic levels. In turn, landlords are offering concessions and incentives to new and existing tenants. Sellers and landlords are expected to realign asking prices towards the offer levels of purchasers and occupiers in the near term. Over the past two quarters, commercial rents of Grade A fitted commercial assets in Abu Dhabi mainland were impacted to a greater degree than Grade B and Grade C offices. Headline rental rates per sq ft in Sharjah have remained largely unchanged with only a slight decline since Q1, largely due to innovative regulations and incentives.

Consumer Confidence: Since June, consumer confidence has returned and been further strengthened with retailers and developers adhering to safety protocols to make shoppers feel more comfortable. The widespread implementation of thermal cameras, sterilisation procedures and social distancing measures have proven to be effective. The impact of additional supply on an already subdued and oversupplied retail sector remains to be seen.

Hotel Market: As anticipated, the Dubai hotel market saw declines in occupancy, average daily rates (ADR) and revenue per available room (RevPAR). Improvements in hotel performance are expected to have occurred in Q3 due to staycations over the long weekends on Eid holidays and end-of-September offers. However, recovery of performance of business hotels will likely be protracted given the rising popularity of video conference and e-meeting applications in light of travel curbs and as companies cut back on discretionary expenses like business travel.

Industrial rents across the UAE vary widely and range between AED 12 and AED 35 per sq ft. The large differential in rents is due to the type of storage spaces which range between open yards, dry, ambient, temperature-controlled and chiller warehouses. Whilst most other segments of the economy are grappling with tepid activity in the wake of the pandemic, the e-commerce space continues to boom, with consumers fulfilling all their shopping needs from groceries to fitness equipment through online channels. The surge in demand, coupled with a potentially permanent change in shopping behaviour even post the COVID-19 situation in favour of online retail, will likely spur demand for warehouses, fulfilment centres and other logistics facilities, especially in the onshore market.

YOU MIGHT ALSO LIKE:

Watch spectacular demolition of Mina Plaza Towers

RTA is renaming four Dubai Metro stations

Sharjah creating world’s largest safari outside of Africa

5,000+ used Dubai’s smart home impound

Who won Dh1.2m waterfront apartment @ District One?