Certain improvements in the property market, the world economic recovery, and increasing oil prices all give hints for better thoughts for the UAE’s property market for the year ahead, a new Cavendish Maxwell report says.
“Investors in real estate markets throughout the UAE have three good reasons to feel more optimistic about the year ahead,” Julian Roche, chief economist Cavendish Maxwell said in the Q4 2020 UAE Property Market Report.
“Property Monitor data from Q4 2020 has been encouraging throughout the Emirates and across virtually all sectors [of the property market],” he said, adding that “cautious consensus optimism” overgrowth in oil costs is strengthening by expectations that the world economy will regain its strength this year as efforts to energize the economy begin to show results.
Average residential property costs in Dubai during the fourth quarter decreased to 4.4 percent on an annual basis but regained 1.2 percent quarter-on-quarter, the consultancy said.
Average apartment rents decreased 16 percent over the 12-month period and 4 percent on a quarterly basis, where villa and townhouse rentals decreased by 1.7 percent on a yearly basis but raised by 3.4 percent from the last quarter.
Locations such as Business Bay, Al Furjan, and Palm Jumeirah have given bigger flexibility over the last few quarters and the traditional in-demand villa and townhouse communities remained static rather than the pandemic.
However, levels of new supply in the emirate remain a topic of concern. Some 28,255 new residential units are prob labilized to be handed over in the first quarter of 2021.
“Upcoming supply continues to be a nagging worry in the new year, but decisions by developers to hold off on new launches and efforts by the Higher Committee of Real Estate will likely help restore the balance between demand and supply, cushioning prices,” Aditi Gouri, head of the strategy and consulting at Cavendish Maxwell, said.
“In 2021, we expect more communities to display stabilization in capital values with the successful vaccine rollout further establishing confidence in the real estate sector and the broader economy.”
Average sale prices in Abu Dhabi’s main residential zones during the past three months of 2020 reduced by 8 percent for apartments on a yearly basis and raised by 1 percent on a quarterly basis. Villa and townhouse prices recorded a yearly fall of 6 percent, but it gained its strength of 2 percent quarter-on-quarter. The average rental fall for apartments was 6 percent on a quarterly basis and 15 percent on annual basis, as per the report.
Other remarkable trends that developed over the course of the last 12 months contain rising demand for better quality units’.
“The last quarter of 2020 was an extension of changes that were witnessed during the year, [be it] upgrading living spaces or adopting flexible working from homes and offices,” Ms. Gouri said. “We saw the prices and rents of more residential communities with superior offerings stabilize and even appreciate, while others continued to soften.”