4. Background
The recent COVID-19 pandemic has affected all the economies across
various sectors
This webinar shall discuss the position of the real estate sector in the
United Arab Emirates (UAE)
It shall look upon the outlook of the sector before the pandemic and
the impact created by the pandemic on the sector
6. Residential Market
Residential sales prices in Abu Dhabi fell on average by 7.5% in Q4 2019, whilst prices in
Dubai fell by 6.0% over the same period. In 2020 Q1 – Prices have further declined.
Dubai’s residential market is showing very early signs of recovery as we begin to
see a sustained increase in transaction volumes. Initial data releases show that
residential transaction volumes in 2019 have increased by 26% compared to 2018
In 2020 over 8,500 units were expected to be delivered in Abu Dhabi, the most since
2013. In Dubai, almost 62,500 units are due for completion in 2020
7. Current Outlook
Average sales prices for residential property in Dubai declined by approximately 7% between Q3 2018 and Q3 2019.
Average rents also declined by approximately 9% over the same period, as the average price per sq.ft for apartments
fell from AED 1,178 in 2018 to AED 1,090 as at September 2019
Despite the continuing decline in prices, project handovers in Dubai continue. It is estimated that a total of 18,500 to
19,000 residential units were handed over in the first 9 months of 2019
8. Sale Transactions of Top 10 Developers
A summary of the top
10 performing
developers in terms of
the
volume of sales
transactions in 2019 is
depicted.
Emaar continues to lead
the pack with more than
7,000 registered off-plan
transactions,
followed by Damac
Properties with 1,276
transactions
10. Office Market
Over the course of 2020, the trend is likely to continue across the UAE, driven
by softer market conditions and regulatory changes
In Abu Dhabi, rental rate is expected to decline to moderate, however the
market is likely to remain favoured towards occupiers
As this trend comes to fruition, longer term commitments from corporate
occupiers are expected, with average lease lengths likely to shift towards
the 5-year mark
The short to medium term outlook for Dubai’s commercial market remains
negative with rents expected to continue to decline across all segments
11. Current Outlook
Dubai’s office market experienced declining rents across the
most established office districts in 2019 as consolidation and
space optimisation continue to drive occupier demand
In response to this, landlords have continued to provide
incentives to attract and retain tenants, including longer rent-
free periods, shorter leases, etc.
The most significant source of demand continues to be from
firms looking to consolidate their operations
The primary sectors seeking office space have remained the
construction and engineering firms, followed by technology
and media companies.
The current pipeline for office space is expected to place
further pressure on rents
12. Contd..
The workplace of the future is being defined by people and technology, thus
impacting office space requirements and occupational needs
Historically, the primary users of office assets were corporates and companies of
different sizes. However, the focus is now on the individual using the building, so
assets need to be adapted more effectively or converted to newer, flexible uses
The growth of remote working is a trend enabled by technology that has led to a
more efficient use of existing space through agile working
Owners will need to forge closer ties with occupiers to collaborate and analyse what
is working for the people who are using the building throughout the day
14. Impact of COVID-19
The outbreak of COVID-19 is adding to the strain on Dubai's already
weak real estate market
UAE has been struggling with oversupply in most segments but
notably in residential and hotel sectors for about 3 years
Property markets are now hit by travel and other mobility
restrictions imposed by governments to contain the spread of the
new coronavirus, alongside low consumer and business sentiment
S&P Global Ratings acknowledges a high degree of uncertainty
about the rate of spread and peak of the coronavirus outbreak
15. Fall in Prices and Employment
It is expected that the fall in residential prices will be steeper than we previously expected, with adverse
trends lingering well into 2021
The current supply-demand imbalance in Dubai's real estate market has been worsened by the
effects of the pandemic
This would lead to a negative employment trends across some key sectors such as tourism and
retail, as well as for certain small and midsize enterprises, which could weigh on demand for new
properties
Although the severity of the impact on Dubai's real estate sector depends on the duration of the
COVID-19 outbreak and the extent of government measures, it's clear there will be downside
This is mainly because of the UAE's reliance on travel and tourism activity, which provides thousands of
jobs in the economy