Dubai’s residential sector demonstrated a resilient start to 2020, with a year-on-year increase in sales volume reflecting more positive buyer sentiment. While residential values continued to fall over the first quarter, the rate of decline lowered on both an annual and quarterly basis, with average apartment values and rents falling by 1.8% and 1.5%, respectively. Villas also saw more moderate declines, with average values falling by 0.8% and rents 1.3% on a quarterly basis.
Q1 witnessed a notable slowdown in new project launches, with around 4,500 residential units launched for sale by developers, down from over 6,000 in Q1 2019 and 12,000-plus in Q1 2018. The fall in new projects bodes well for a market where oversupply has long suppressed values. The notable reduction in launches from government-backed developers also points to the early success of the Higher Committee for Real Estate Planning, a body mandated to shape several key areas of real estate policy, which first convened in November 2019.
While government measures introduced to combat coronavirus (Covid-19) came into effect in March, their immediate impact on Dubai’s residential sector was limited, with travel restrictions and social isolation policies most acutely affecting the Emirate’s hospitality and retail sectors. The broad economic support packages introduced by the Dubai government, complemented by various relief measures from private sector landlords, will go some way to shore up the real estate market and offer welcome support to residential tenants.
It is likely that the ongoing pandemic’s effects will be reflected in second quarter figures, with disruption to the transactional process itself, coupled with an overall economic contraction, likely to cause near-term challenges. While the overall impact of Covid-19 on Dubai real estate depends largely on the pandemic’s duration, and the nature of the public policy response, the residential sector will clearly face significant headwinds over coming months