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Selective improvements in some communities, a global economic recovery and rising oil prices all provide signs for optimism for the UAE’s property market for the year ahead, a new Cavendish Maxwell report states.
“Investors in real estate markets throughout the UAE have three good reasons to feel more optimistic about the year ahead,” Julian Roche, chief economist at 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” over a rise in oil prices is reinforced by expectations that the global economy will recover this year as efforts to stimulate the economy begin to take effect.
Average residential property prices in Dubai during the fourth quarter declined 4.4 per cent on an annual basis but improved 1.2 per cent quarter-on-quarter, the consultancy said.
Average apartment rents declined 16 per cent over the 12-month period and 4 per cent on a quarterly basis, while villa and townhouse rents were lower by 1.7 per cent on a yearly basis but increased 3.4 per cent from the previous quarter.
Locations such as Business Bay, Al Furjan and Palm Jumeirah have shown greater resilience over the past few quarters and the traditionally sought-after villa and townhouse communities remained steady despite the pandemic.
However, levels of new supply in the emirate remain a concern. Some 28,255 new residential units are expected 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 balance between demand and supply, cushioning prices,” Aditi Gouri, head of strategy and consulting at Cavendish Maxwell, said.
“In 2021, we expect more communities to display stabilisation 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 major residential zones during the last three months of 2020 declined 8 per cent for apartments on a yearly basis and increased 1 per cent on a quarterly basis. Villa and townhouse prices recorded a yearly decline of 6 per cent, but rose 2 per cent quarter-on-quarter. The average rental decline for apartments was 6 per cent on quarterly basis and 15 per cent on an annual basis, according to the report.
Other notable trends that developed over the course of the past 12 months included increased 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 stabilise and even appreciate, while others continued to soften.”
This article was originally published in The National
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