The reaction to this current coronavirus pandemic has ranged from caution to panic and uncertainty. The coronavirus virus has had a ripple effect on property markets globally as much as other types of industries and markets. As several countries are in the process of looking at possible solutions to curb the coronavirus outbreak, the UAE has already taken concrete steps toward doing so. It was expected that the Dubai Property market will start recovering with the effect of government new policies and Expo-2020 (now delayed to 2021), however contrary to this unwanted and uninvited situation, it has not ruined the hopes of everyone.
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The Coronavirus sweeping the world
The outbreak of coronavirus is has shaken the world. Its effect was visible at its initial phase, however as the time has passed and WHO has declared it as a pandemic, it has shown its worst effects on every part of the world.Countries in lockdown condition for a longer time is not very good news. The persistence of the current condition for a longer period, it is very much certain that coronavirus crisis will lead to a recession in the economy.
Corona Effect on Dubai Property Market
Gulf nationsare also struggling with the adverse effect of the coronavirus and will dampen the recovery graph of the Dubai Property market. The prime focus of the region is to contain the spread and simultaneously it is also working for economy-boosting measures. The Government decision tosuspendall construction with immediate effect shall impact the delivery of new properties.Undoubtably, the onset of coronavirus has slowed down the growth of the property market.
Recently, the Economist Corporate Network in a survey titled: ‘Middle East: Coronavirus: implications for MENA businesses and their leaders’, nearly 24 percent of respondents said that their business is facing redundancies, while 20 percent of them are forced to accept unpaid leave as a result of the coronavirus impact on their businesses.
With the worst effect of pandemic prices on Dubai, properties may fall to a level last seen 10 years ago. The slowdown in Dubai real estate prices continued in February with another month of declines of less than 1 percent, according to recent research.
Experts View on Dubai Property Market Post Covid-19
However, Dubai with its track record, is known for its bounce back faster than any other destination globally when recovering from Global calamity and is expected to have an influx of new residents as it will present itself as an Opportunity Destination. Dubai also provides peace of mind to investors even during times of global uncertainty because the region attracts so much wealthy clientele.
Dubai’s real estate market has developed a positive outlook ahead of the Expo 2020 and this is the right time for home buyers and investors,and they will enjoy a great return when the market will rebound.
The economic dip is always seen as a great opportunity for home buyers and particularly for property investors looking for a fair bargain. The expectation to reap significant returns on their investments can be clear when the market turns back around.
The survey of 2,500 renters, homebuyers, and investors across the Mena region shows the positive sentiment for homeowners and they expect the fall in prices of their property will stabilize in the coming months.
The Peninsula study also included the Peninsula Home Sentiment Index, which showed that overall sentiment towards the UAE real estate market improved in the first quarter of 2020 – before the Covid-19 response measures – with the index rising from 44 to 47.
Investors and end-users have started taking interest to invest in Dubai property as the interests are now effectively zero (base rate) and mortgage cap being lowered by five percent for first-time buyers.
S&P expects government policies and initiatives such as ease of visa rules to promote development in the UAE real estate market, in addition to the huge Expo 2020 show postponed to 2021. After the coronavirus effect comes to close,the Dubai property market should become buyers’ boom as stakeholders will seek to capitalize on factors such as low-interest rates and lower deposits.
With the impact of coronavirus stock market has plunged and with its unpredictable nature, losses are expected further with it bounce back trends upward. Hence the stability of investing in brick-and-mortar keeps you better protected over the medium and long term.
“We tend to forget that the only industry where the investment is made in appreciating asset is real estate. Yes, there can be a temporary correction that might take place, but in the long run, you will make money. I always advise people to refrain from investing in real estate if they do not have an outlook of 7-10 years. Until such time that your asset is built and delivered, your risks are under control,” said Atif Rahman, director, and partner at Danube Properties.
“I firmly believe the situation with Covid-19 shall improve rapidly in UAE however the global impact will last for at least a quarter before things roll back to normal. We will assess the situation then and decide about launching any new project,” he said.
Though the outbreak happened in December’19 and soon WHO has declared it as world pandemic, strong property transactions were witnessed in January and February 2020. According to Property Finder, overall transactions grew 12 percent year-on-year during January and 33 percent in February. The off-plan transaction, meanwhile, jumped incredibly 76 percent, real estate portal Property Finder said, quoting Dubai Land Department data.
“The Dubai market is matured enough to adopt very fast with the current market trends. Last year, we successfully openedto abroad market attracting many new investment destinations. By far the year 2020 seems to be local buyers and in real estate dictionary we call it a ‘buyers’ market’ as prices are very attractive to buy, which allows developers to target and focus local base audience,” says Salah Omar, marketing and PR director of A1 Properties.
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