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S&P expects 30 percent sales growth in Dubai’s real estate

The S&P Global Ratings organization have recently posted positive remarks on Dubai’s real estate, furthermore, forecasting over 30 per cent growth in revenue towards to the end of this fiscal year.

According to the latest data from Property Finder, the year-to-date total sales value reached AED 61.97 billion while June was the highest real estate sales transactions occurred since December 2013 with 6,388 deals worth of AED 14.79 Billion.

The June made the 8 years monthly sales volume data soared by 44 per cent and by 33 per cent in terms of value.

This stupendous rebound was perceived to be driven by strong demand from investors, and end-users on the back of economic come back spurred stimulus package by the government along with the speedy vaccination and attractive visa reformations.

Recent analysis of ValuStrat shows monthly performance on ready-to-move-in homes sales rose by 75 per cent and Oqood (contract) registrations increased by 59 per cent. Compared to previous quarter performance which is Jan to Mar; April to June quarter shifted by 7,500 transactions.   

The luxury market brings more global attention

“The rebounding of Dubai’s luxurious market brings more global look, perhaps signaling the beginning of a ‘Roaring Twenties Era’ for world property market,” said Faisal Durrani, the head of Knight Frank’s MENA Research Department. Dubai’s prime real estate market sales have surpassed 2020’s total economic activity, particularly tourism, has rebounded in the past six months on the back of one of the world’s fastest vaccination campaigns.

According to data from Anarock, Indians bought 16 per cent of the housing in Dubai by sales volume – boosting it over AED 8 billion in 2019. Their interest in Dubai real estate has only increased since the pandemic– 2020’s first quarter which saw a growth of 15 per cent in the number of transactions of property in comparison to first quarter of 2019.

“With average home prices floating at AED 900 per sq ft and banks proposing lowest interest rates and up to 85 per cent high LTV, it has become more affordable for average households to buy their permanent homes,” says Haider Tuaima, head of real estate research at ValuStrat.

Positive Outlook

“We are seeing the market already bouncing back. The market, across the board, has seen an uptrend. For instance, in March this year the prices have increased by 1.3 per cent in the citywide. This is, in fact, the first year-on-year increases in prices we have had since late  2015. Ever since the real estate market hit the bottom in during 2020 pandemic, the prices have recuperated up to eight per cent now,” states Ayman Youssef, VP at Coldwell Banker UAE.

Sentiment in Dubai is better now as the whole world realized how efficient it handled the pandemic situation. Consequently it led many affluent buyers to consider Dubai as their second home or to put their speculations in.

“We have seen a lot of international and local buyers moving to Dubai especially into the luxury segment because of the striking prices and eases of pandemic lockdowns. We are witnessing a significant history for the Dubai luxury property sector. Properties cost above AED 10 mil. have seen highest market share which is 2.5 per cent,” Youssef said.

Occupancy in smaller flats or B grade flats are low

Mr Youssef mentions Dubai’s occupancy in grade B homes is low now; “This is because many prefer bigger or more bedroom villas to current apartments due to the new working-from-home trends and the need for bigger spaces and amenities surrounded by greener areas. We also see a rise of demand in waterfront units”.

Stable Growth

Prathyusha Gurrapu, head of research and advisory at Core, said due to various demand drivers, transaction activity has seen steady increase, particularly in the secondary market with a 64 per cent increase in transaction activity over the first quarter this year compared to the same quarter of 2020.

“On the other hand, off-plan market activity continues to face headwinds, contracting by 29 per cent over the same period. That said, we foresee steady absorption for near completion off-plan projects from select major developers over the remainder of 2021 as demand and sentiment improves with developers focusing on existing under-construction projects and deliveries,” Gurrapu told Khaleej Times.

Leverage of Rises

Highlighting the top five growth drivers for property in 2021, she said UAE’s high vaccination rates, safety and business continuity for businesses and residents; relatively easy access to finance — lower LTV values and lower interest rates making it easier to climb the property ladder; visa and social reforms; a raft of fiscal incentives and government measures to support the economy; and Expo 2020-led positive economic sentiment will further strengthen market sentiments.

“Despite high rates of vaccinations, due to the very nature of the pandemic and its ever-changing impact on global tourism and mobilization, we are yet to say with certainty that we are in a sustained recovery phase. That said, with strong fundamentals, business resilience and investment interest, most market stakeholders hold a positive market sentiment and remain cautiously optimistic for a steady 2021 on the back of efficient government measures,” she added.