Dubai's real estate sector witnessed the completion of an estimated 14,000 residential units in the first six months of 2020 - or 30 per cent of the 45,700 scheduled for handover this year - despite the Covid-19 lockdown restrictions and slowdown, reflecting the underlying strength of the emirate's resilient housing market.

According to the ValuStrat Price Index (VPI) report, second-quarter residential home sales transactions totalled 4,459, down 48.8 per cent quarter-on-quarter and 39.3 per cent year-on-year with a value of Dh7 billion and an average ticket size of Dh1.57 million. Off-plan sales represented 66 per cent of all home sales, ValuStrat said in the report.

The value index for residential capital values stood at 69.3 points, down 4.6 per cent quarter-on-quarter basis and 11.9 per cent year-on-year basis. The citywide weighted average residential value dropped to Dh9,483 per sqm.

The price index for residential rental values stood at 64.8 points, down 5.2 per cent quarter-on-quarter basis and 10.7 per cent year-on-year basis. The weighted average annual residential asking rent in Dubai was Dh81,907, apartments at Dh62,176 per annum and villas at Dh203,112 per annum. Residential occupancy was estimated at 84.4 per cent, said the report.

"While there is a 50 per cent decrease in total number of transactions during second quarter of 2020, however the occupancy rate for rentals has gone up to 84 per cent, which is in turn supplementary to the sales and purchase market and a very positive sign for the recovery of the industry by fourth quarter of this year," said Shaher Mousli, chairman of Arthur Mackenzy Properties Group.

"Rental RoI is lower than what it used to be. but the same is reflected in sales prices which have corrected to justify that RoI paving the path to a healthy eight per cent to nine per cent return. All this coupled with the positive geopolitical movements being taken by our wise leadership, will help review the markets to their finest state."

In its June report, ValueStrat noted that Dubai's residential property values had shed most of the premium they had put on at the peak of the upturn in June 2014, with average prices now hovering to what they were during January last year. This is according to the newly-created ValueStrat Price Index, which also found that the correction was most pronounced at JBR and Downtown. The Palm also saw some of this, the ValuStrat report adds.

"The drop in transactions can be attributed to the obvious reasons of reduced mobility and business traction globally during second quarter, so I am not quite sure why the year-on-year comparison for the period should be a matter of consideration or concern, said Haleema Al Owais, CEO of Sultan bin Ali Al Owais Real Estate.

"We as an organisation are in the business of build to rent, and while the renewal values have reduced the occupancy rates have faced very little or no change, hinting towards a revival just around the corner. The housing industry is a necessity and not optional and with the right approach and strategy sustainability is very achievable."

Office transactions

Dubai's office stock totalled 9.1 million square metres gross leasable area (GLA) as of the start of the year. The estimated supply for this year stood at 372,770 square metres GLA. Office sales transactions during the second quarter of 2020 were 80.2 per cent lower when compared to the same period last year.

Overall transacted office prices fell 2.8 per cent year-on-year basis and seven per cent quarter-on-quarter basis to Dh7,169 per square metre. Median office asking rents declined 8.6 per cent annually but remained stable quarterly and stood at Dh864 per square metre for typical office units. Citywide office occupancy stood at 80.4 per cent. ValuStrat Price Index - Office capital values stood at 62.3 points, down 1.3 per cent on a quarter-on-quarter basis and 10.1 per cent year-on-year. The weighted average office price as of June 2020 was Dh8,600 per sqm.

There are 134 malls and shopping centres in Dubai with an estimated total GLA of 4.1 million sqm. Under-construction GLA is estimated at 827,000 sqm.

Hospitality to rise

As of February 2020, total stock of hotel rooms and hotel apartments stood at 101,889 and 25,935 keys, respectively. An estimated 1,309 keys were added from a total of six hotels that opened during the first quarter.

Two hotel projects with a total of 1,431 rooms were announced during the first quarter.

International guests year-to-date in February reached 3.3 million, up 4.1 per cent compared to the same period last year. The citywide occupancy rate for the same period stood at 82 per cent, dipping two per cent year-on-year.

Revenue per available room and average daily rate fell on an annual basis, falling 10.6 per cent and eight per cent, respectively. Dubai's top three tourist source markets were Western Europe (21 per cent), the GCC (20 per cent) and South Asia (16 per cent).

Dubai also saw an increase in visitors from three source markets, which were the guests coming from Russia, Saudi Arabia and France.

As movement restrictions due to the Covid-19 pandemic negatively impacted tourism on a global scale, it was to be expected that between March and June, hotel rooms and hotel apartments were vacant for the most part, and some hotels were closed.

A publication from HotStats reported that the average RevPAR during May was record low Dh47.2, down 84.4 per cent when compared to May last year. Dubai's combined average RevPAR for the period January to May this year was Dh328.8, 48.4 per cent below the same period last year.