Press Releases

May 29, 2020

Quarterly Report Dubai Q1 2020: Residential Market Overview

The outbreak of the COVID-19 has impacted demand while the increase in supply remains consistent

Residential transactions were not significantly affected by the outbreak of COVID-19 in Q1. The registered no. of residential sales was 9,591 (off-plan and ready units), a 13.5% increase compared to the same period 2019 (8,454). This can be explained in part by a fall in values. The total value of transactions in Q1 exceeded AED 15bn, a 5% increase over the same period in 2019 (AED 14.4bn).

The Dubai government has taken measures to help residents amid the COVID-19 outbreak. All residents whose visas have expired in early March 2020 will receive an extension until the end of December 2020. Authorities issued directives to suspend eviction judgments related to residential and commercial facilities for two months (March & April). The government also has suspended imprisonment judgments on all rent-related cases.

Official figures from Dubai Statistics Centre (DSC) showed that an additional 66,209 units were delivered in 2019. The new builds reflect an 11% increase in housing supply over 12 months to reach 663,149 units, 81% of which are apartments. Estimates showed an additional 5,235 units completed in Q1 2020. Major completions in Q1 include Resorts by Danube (419 units) Mudon Villas – Arabella (496 Units), Boulevard Point in Downtown (297 Units), and Binghatti Stars in Silicon Oasis (363 Units). Looking ahead, approx. 55,265 units are in the pipeline for the remainder of 2020; however, we expect that this number may not materialize given current conditions related to the outbreak of COVID-19, including restrictions imposed on the construction sector and projected demand.

Q-o-Q average sales prices and rents continued to decline, with overall residential sales prices falling by 2.1% to AED 11,377 per sq m compared to Q4 2019. Y-o-Y prices declined by 6.2% compared to Q1 2019. Apartment rents declined by 2.3% Q-o-Q; however, villa rents only marginally declined by 1.6% over the same period. The market performance will remain under pressure due to a supply glut, sluggish demand, and additional factors related to the outbreak of COVID-19.

While the outbreak of COVID-19 has created uncertainty in the market, the full impact is yet to be quantified. Furthermore, the increase in new housing supply needs to be managed to bring more balance between supply and demand in the market.

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