UAE’s GDP is expected to further improve from 0.5% growth in 2017 to 2.6% in 2020 due to higher growth anticipated in the non-oil sector, as per ENBD’s latest research.
Despite the marginal drop in the oil price in 2019, the major growth factors are welcoming initiatives for Expo 2020, lower interest rate environment and relatively stabilized property market.
The Government appears to be determined to continuously improve the consumer and investment markets, and the overall local and international business of the country, including the real estate market. In December, a 5 year Multi Entry Tourist Visa was announced to welcome higher number of visitors. Some other flagship initiatives taken are the 10 year Gold Card Residency Visa, increased limits for foreign ownership of publicly listed companies, and removal of Central Banks’ lending cap on the total deposits.
In 2019, more than 35,000 residential units were handed over in Dubai, while 83,000 units are scheduled to be delivered in 2020 (Source: DLD). We believe that the current supply to demand mismatch is an understandable strategic decision deployed in order to welcome and sustain new investors and professionals expected to move to the UAE going forward.
The exit of real estate investment is rather limited in the UAE. We believe that the capital market instruments like REITs and ETFs, if and when implemented, should attract not only the end users, but also small to large scale investors.
Combining off plan and secondary markets, 2019 registered more than 20% increase in the total number of real estate transactions covering both financed and traded on cash.
The combined off plan sale of the top 5 real estate developers i.e., EMAAR, Damac, DP, Azizi and Meraas, accounted for more than 60% of the deals made in 2019.
The highest overall off plan sales transactions were in Dubai South, Dubai Hills Estate, Dubai Creek Harbor, Downtown Burj Khalifa and Business Bay.
The majority of the secondary market transactions done were in communities such as International City, Business Bay, Dubai Marina, JVC and JLT.
Apartment sale and rent prices in Dubai declined 5.27% and 8.18% respectively in 2019 compared to the previous year. Villa sale prices and rent fell by around 10.82% and 8.28% respectively. (Source: REIDIN)
Abu Dhabi witnessed an average decline of 7.51% in residential sales prices and 6.19% in rental prices.
Sharjah witnessed slightly lower (5.38%) decline in sale prices over the year. Ajman, contrarily, witnessed around 14% improvement in sale prices. Its rents declined at a lower rate and 6.24% decline in rentals over the year. (Source: REIDIN)We expect a limited decline in the sale and rental prices over the next 6 months. Over the medium to long term, we remain positive about the economic, social and infrastructural resilience of the country.