Dubai Property - Buyer's Market in 2021
Due to the COVID-19 pandemic, the Dubai property market is highly affected. Dubai’s real estate market has to face a difficult time but lower prices may be a good time for investors looking to buy. Because of the pandemic, now is a “good time” for people to buy real estate in Dubai as estimating that resale units could cost 10% less than a new development at this point.
The market is likely to remain subdued for the next two years as the city recovers from the pandemic. Dubai real estate has been snapped up in the past few months by buyers taking advantage of decade-low prices, easy financing, and an economy open for business despite the pandemic.
Sales of luxury villas, sea-view apartments, and second-hand family houses have jumped, re-energizing a property market that saw a sharp fall in activity at the height of the pandemic and had been in a five-year slump prior to that. But with rents still falling and oversupply weighing, the road to recovery will be long for one of the emirate’s main economic engines.
House prices in Dubai are expected to continue falling during the remainder of the year, mainly due to huge supply, aggravated by low demand due to the COVID-19 pandemic. In 2019, about 56,000 units were added to Dubai’s total residential stock, bringing the total supply to 575,000 units, according to JLL MENA. In Abu Dhabi, around 8,000 units were added, bringing the total stock to 265,000 units.
Factors To Consider If Investing in Dubai Real Estate
2020 a good time to invest in real estate in Dubai? Prices are edging towards decade-long lows, according to some research reports, and there appear to be dealt to be done. Dubai real estate is well-known when most Hollywood stars investing in Dubai real estate.
While there are still a number of challenges which Dubai’s residential market is currently facing - a historic supply glut and now more recently due to the Covid-19 pandemic softening in demand levels - there are many compelling factors underpinning relatively strong activity levels.
It will come as no surprise to many market observers that average residential prices in Dubai are not far from the last decade’s historic lows. However, it is important to remember that Dubai is a collection of micro-markets so the headline numbers do not always tell the full story, which is that we are seeing the early stages of a recovery ensue.
Secondary areas and areas with an influx of supply are certainly still seeing considerable price declines, however, certain prime areas such as the Palm Jumeirah, Jumeirah Bay, and District one have seen their respective average price per square foot increase in the first eight months of this year by up to 6 percent compared to the same period a year earlier.
Lower financing costs are not the only way that affordability in the market has been improving. Given current market conditions, developers have begun to offer ever more favorable payment plans to entice demand. As of 2020, in Dubai, on average where payment plans are offered, 28.4 percent of the total payment is structured to be paid post-handover, up from 6.6 percent in 2016. Developers are now also demanding lower levels of payments during construction and on completion.
Visa regulations have also been eased in recent times, this change was in addition to a range of regulatory changes announced in 2019, which included the announcement of 100% on-shore business ownership. New legislations include the introduction of a five-year retirement visa for those over 55 years old with an investment of AED2 million or more in the property market, income in excess of AED20,000 per month, or those with more than AED1 million in the capital.
Other options include five-year visa terms for investors who purchase above the AED5 million threshold. In addition to these property-related visas, a range of business investment visas has also been approved. Capital investments over AED10 million in the enterprise can obtain a 10-year visa, where up to 40 percent of the investment can be related to property purchases.