The real estate market in Dubai at the time of quarantine: what is the situation and consequences

Dubai has long been a regional, tourist and business center of the United Arab Emirates. And one of the most important here is the real estate sector.

However, the arrival of quarantine in the emirates has made its own adjustments. How much has this sector been affected by the covid 19 epidemic? What is going on here at the moment? Let's take a closer look at all this.

Covid-19 and the real estate market in Dubai

It is very important that, according to the official report, the beginning of the first quarter of 2020 was the best time for the real estate sector in the last six years. This means that this sector was "quarantined" on a fairly high wave of productivity.

If you look at the indicators since the beginning of the year, then everything is really not so bad. During this period, 12,254 transactions took place. The total amount is 24.15 billion. The ready-made housing market has sunk a little, but the most popular areas are still: Dubai Marina, Downtown Dubai, The PalmJumeirah, Mudon and Dubai Hills Estate.

After the pandemic swept the world in March 2020 and restrictions were imposed, the volume of real estate transactions fell worldwide. Of course, the restrictions also affected the UAE. When compared with data for February, the volume of transactions for the sale of real estate under construction fell by 42% in March.

Also, the research results showed that:

• Prices for apartments from the middle segment fell by 12%.
• The rental rate for apartments decreased by 14%.
• The rental rate for townhouses and villas is 10%.

However, it is noted that against this background, the demand for the purchase of townhouses and villas has increased markedly. At the moment, this trend has continued. Apparently, this is related to Covid-19. This type of real estate in Dubai is much more comfortable if it is necessary to adhere to quarantine (after all, very strict restrictions have been in effect in this country for three weeks). However, according to surveys, only 1/3 of tenants and owners during the covid 19 pandemic do not believe in stability, much less market growth. And definitely, real estate in Dubai immediately felt the impact of the coronavirus.

Is everything so bad in the real estate sector?

Since April, when the coronavirus pandemic began to recede, many who are interested in real estate in Dubai have observed positive trends in this sector. As mentioned above, houses with a garden or just a fenced green area have become even more in demand. Experts also noted an increase in demand for renting such real estate in the UAE.

To understand the situation and answer the question: "How quickly will Dubai recover", we note that in the last week of April, sales increased by 5% compared to the previous week. And mortgage requests increased by 27% by the end of the month.

Apparently, the positive trend is due to the fact that at the end of April, the EMIRATES significantly relaxed the isolation regime. Shopping and business centers, public places, enterprises began to open, and it was already possible to move by car (previously, at the beginning of the quarantine, only by taxi). Since the end of April, the subway has resumed operation in Dubai.

Business activity has been gaining momentum since May. It is worth noting here that March, April, and May were very difficult for the real estate sector. However, the government, as well as developers, banks, heads of large companies and landlords, tried in every possible way to alleviate the current situation related to the crisis during the pandemic. A number of necessary measures have been taken:

• Tenants, in the presence of overdue lease payments, were released from eviction during quarantine (the ban is valid for three months). The same rule applies to commercial real estate in Dubai.
  
• The economy received government support in the amount of 1.5 billion dirhams.
• Local banks have received an order to support problem customers.
• The advance deposit was reduced. Now, when buying real estate for Emirati citizens, it is not 20%, but 15%. For foreigners, it has decreased from 25% to 20%.

All these measures were taken in March, so the real estate sector in Dubai was not affected as much as some analysts had predicted. For example, as for housing prices, since the beginning of the year and during the quarantine of the coronavirus, prices for apartments and villas have decreased by about 2% (compared to the same period in 2019).

It is also important that the leading developers plan to significantly reduce the number of facilities under construction in the emirate. More attention will be paid to the facilities that are currently under construction. But the number of new ones will be reduced. This should have a positive impact on the Dubai market. This approach will help to harmonize supply and demand, as well as stabilize prices.

As we can see, there are negative consequences of quarantine in the real estate sector in Dubai, but they were not so devastating. After all, on the one hand, the sales level before the quarantine was quite positive. On the other hand, the government and stakeholders have done everything to ensure that this sector comes out of quarantine with minimal losses. However, it is already clear that the recovery of the real estate market will take some time. Analysts say it takes at least a year to do this.