5K Dubai property units online in Q1; virus to hit deliveries in 2020
dubai — The number of property units to be handed over in Dubai this year will be less than 2019 due to a slowdown in the construction sector amid the coronavirus outbreak.
In the first quarter of 2020, Dubai saw nearly 5,000 units coming online, bringing total residential stock to 555,000, according to real estate consultancy Core.
“We have seen a slowing down of handover volumes compared to the same period last year… due to ongoing Covid-19 restrictions, we expect future handover volumes to come down as construction timelines and supply chains are impacted along with softened demand. Further downward revisions are expected on supply forecasts as they will inherently depend on the period of the pandemic and the pace at which functionality returns coupled with buyer confidence as developers adjust to ongoing market conditions,” said Prathyusha Gurrapu, head of research and advisory at Core.
Property Finder said last year that a total of 13,216 units were scheduled to be completed in Dubai towards the end of 2019 and the first quarter of 2020. Since the actual completion rate is nearly 40-50 per cent less than the announced deliveries, around 6,500 units were scheduled to come online.
According to Core, Meydan and MBR City were the leading areas by number of handovers in the first quarter, followed by Dubailand and Al Furjan.
Though inquiries and interests are relatively steady, the residential sales market continues to follow a downward trajectory with almost all areas showing year-on-year drop.
“We have seen more double-digit drops than previous quarters, however, transaction activity continues to be robust,” said Gurrapu.
Secondary market to remain busy
But lower interest rates and the ease of regulations on mortgage payments by the Central Bank will keep the secondary market busy, Core said.
“The attractive interest rates and the favourable loan-to-value ratio due to the increase of five percentage points for first-time buyers is expected to improve affordability in secondary sales mortgage market. While this is a good initiative, caution and potential contraction in disposal income levels would make some buyers delay their decision making. That said, opportunistic purchasers are expected to take advantage of further drop in sales prices in this period of reduced liquidity,” Gurrapu pointed out.
Allsopp & Allsopp said it recorded a 31 per cent increase in sales transactions and a 34 per cent rise in buyer registrations. Property portal Bayut said last week that Dubai’s real estate market showed promising signs of stability in the first three months of 2020 as most of the popular areas in the emirate are more or less steady or even slightly higher in the first quarter compared to prices in the fourth quarter of 2019.