How coronavirus has impacted the top end of Dubai's property market

Being stuck at home for extended periods has prompted many residents to seek new properties with more space, says Luxhabitat

Dubai's prime residential market witnessed strong growth in the third quarter of 2020, with more than 2,700 deals for luxury apartments and villas.

The upmarket segment of the market saw a 24 percent increase in overall number of units sold quarter-on-quarter while total volume of transactions reached AED7.4 billion compared to AED5 billion in Q2, according to analysis by Luxhabitat Sotheby’s based on data from the Dubai Land Department.

The impact of the coronavirus lockdown earlier this year, forcing people to stay at home for extended periods, has prompted many residents to seek new properties with more space, said Andrew Cleator, managing director of Luxhabitat Sotheby's International Realty.

“Being forced to spend more time at home due to the current Covid-19 pandemic has certainly demonstrated people have been looking for more space to occupy.

We have seen the demand rise for townhouses and villas as they are more appealing to end-users, especially those properties with good outdoor spaces and swimming pools,” said Andrew Cleator, managing director of Luxhabitat Sotheby’s International Realty.

He said Palm Jumeirah, MBR City District 1, Arabian Ranches, Al Barari and Dubai Hills Estate witnessed a significant spike in interest from end users.

"Add this to the fact that banks are currently offering low fixed rate mortgages as well as higher loan to value rates. This has triggered a flurry of first time buyer purchases as buyers now see the long term benefits of owning opposed to renting,” he added.

According to latest data, there has been a 10 percent correction in price/AED sq ft across the prime residential market from AED1,327 to AED1,194, driving a strong surge in buyer activity.

The Dubai prime residential market areas used for the analysis included Al Barari, Arabian Ranches, Downtown Dubai, Dubai Marina, Business Bay, Emirates Living, Jumeirah, Jumeirah Beach Residence, Mohammed bin Rashid City, Jumeirah Golf Estates, Jumeirah Islands, Jumeirah Lake Towers and Palm Jumeirah.

The top 3 areas in terms of sales volume in Q3 were MBR City (AED2.2 billion), Downtown Dubai (AED1.2 billion) and Palm Jumeirah (AED1 billion) while the Jumeirah Islands area showed the highest growth of sales.

Cleaver said the data is indicative that due to the ongoing Covid-19 pandemic, many are opting for homes and villas with larger spaces, outdoor areas and pools as sales of villas doubled from 203 villas sold in Q2 and 265 villas sold in Q1 to 438 villas sold in Q3.

The secondary prime residential market doubled in sales volume compared to Q2 to AED6 billion in Q3 as prices fell by about 12 percent from AED1,169 in Q2 to AED1,028.

George Azar, CEO of Luxhabitat Sotheby’s International Realty, said: “As the off-plan segment hasn’t been able to absorb the capital with enough new releases, cash is diverted to the most stable secondary property markets and we have seen a big increase in the prime residential markets. This will only strengthen further as Dubai will play a key role in the post-pandemic scenario.

George Azar, CEO of Luxhabitat Sotheby’s International Realty.

"The UAE will attract a significant influx of expats as well as capital mainly because of how it has handled the pandemic issue on a global level while keeping the economy open. This has helped with a positive and sustainable image worldwide and will surely help in recovering the industries in the near future."

Off-plan registration volumes decreased by 13 percent from the previous quarter to AED4.5 billion, mainly due to lack of development releases.