Shall I buy? Shall I sell? Shall I wait?

After attentively listening to various theories and insights exchanged amongst top experts in the Dubai Real Estate market, some of which reflect positive signs for shoots of recovery in a form of a V shape market whilst others have more of a gloomy perspective regarding the same. 

So what’s really been happening in the Dubai Real Estate Market since the unprecedented pandemic hit the world? What would be a prudent advice to offer our buyers, investors and sellers and how can we possibly guide them from here with so many opposed views about the foreseeable direction of the property market? 

Facts ?? Pre - Covid:

Right before the pandemic, Dubai was emerging out of a 6 year continuous decline cycle in property prices or a more suitable term would be a correction in property prices. Couple that with a high level of optimism floating around partly due to the smart incentives introduced by the government to stimulate the economy and create more demand in the property market, to name a few:

??Highest loan to value and all time low low interest rates with some banks also lending the extra cost associated with buying a property for first time buyers. 

??The formation of Dubai’s high committee in charge of regulating the supply and demand in the property market through delayed handovers and new launches of further residential projects. 

And partly due to the hype over the opening of Expo 2020 and the anticipated future economic growth drawn on the assumption of 25 million visitors arriving to Dubai during the period of the Expo and beyond. 

After Covid 19 hit:

?? With emirate’s main economic drivers “ trade, transportation, tourism, aviation, retail and real estate “ were slammed shut and the world coming to a complete halt during lockdown, Unparalleled fear confiscated people’s livelihoods and threatened their businesses, the fear from the unknown and the uncertainty to foresee a transparent future, have caused a major shift in people’s mindsets, had many home owners re-evaluating their finances, their goals and in some instances their country of residence. Consequently, the owners who had their properties already on the market were suddenly forced to take quick measures for a quick exit, by either dropping the listed price or accepting the first Sales offer that came through. 

Post lockdown: 

??The above mentioned points coupled with the psychological effect instigated by the total lockdown for weeks on end and with lack of personal space for many, created an unprecedented influx of demand for the first time buyers / end users to take advantage of the low and in some cases below market value price point and offer on larger or upgraded properties in prime villa communities resulting in a 400% growth in demand on villas, shortage of stock and buyers overbidding each other for the property of choice. 

Quoting our Sales Manager Fintan Flannely, Whilst there is a post covid bounce back or you call it a mini boom ??, there is no concrete evidence to point to it being sustainable with the demand continuing at the same levels & here’s why:

??If we anticipate the upcoming projects supply, the continuity of Salary cuts, Job losses and defaulting mortgages, people will be suddenly forced to make prompt decisions to downsize or worse, sell and relocate back home. Since a good part of Dubai’s economy is fueled by expatriates spending, losing that element will cause a negative effect on the Dubai economy, the GDP and inevitably the property market in the foreseeable future, causing further decline or at best stabilization in prices. 

?? Expo 2021: I hope I am wrong here but just using my common sense, after reading about a tweet in April by “Nasser al-Shaikh “ a former head of Dubai’s department of finance” predicting a minimum population contraction of 10 per cent for the year, couple that with Covid restrictions on travel & strained financial freedom caused by job losses, I am not very optimistic that the numbers of foreign visitors arriving to the Expo 2021 will be justifiable to outweigh the humongous investment figures injected in the Expo. 

However, if I am to share some positive indicators which will hopefully boost the economy & the property market: 

??The Israel–United Arab Emirates normalization agreement that will attract more Israeli investors into the country. 

?? check this link below shedding the light on wealthy Indian investors circling the dubai property market. https://www.google.as/amp/s/indiaincgroup.com/indian-investors-are-circling-the-dubai-property-market/amp/

?? Whilst the uncertainty of maintaining jobs still prevails in Dubai and around the world, more clarity is slowly surfacing back about what the term Covid means and how we can cope with the sudden changes it brought to our social habits and lifestyle, how we can protect ourselves and our loved ones and most importantly how we can prevent it from spreading further. With more clarity, comes consumer confidence, freedom of movement and traveling, all of which will play a major role in a faster shoot of economic recovery. 

?? The government initiatives made to extend residential visas till the end of the year allowing some breathing space to expats to find new jobs after being made redundant. 

?? The health guidelines and measures taken by the Dubai health authority to decontaminate and control spread of the covid virus in the country is unrivaled in comparison to other major cities / countries. Safety now tops the long checklist for what makes Dubai one of the most desirable cities to live in the world. 

?? With more retractions to pay the contractors on time, we will probably see further delays in projects handover and new launches which will keep the issue of supply demand in check. 

??OUTCOME: 

If you have made it this far, you should know by now that the right answer to whether you should buy, invest, rent or sell lies solely on your current circumstances and personal needs as an individual and equally on your purchase objective and life goals. 

Lastly, I would like to end my long awaited article by requoting this “ Dubai is one resilient Emirate that has has once defied a global economic crisis and emerged from it bigger, better, stronger, smarter and happier” and in my view, this time will be no different. 

If you have anything to add, please do so in the comments section below. Would love to hear from you. 

Sincerely

Hayat Shilcock - Client Manager