The ‘perfect storm’
Three main factors supported the phenomenal growth of the secondary residential market this year
As we entered 2021, it was impossible to predict the long-term impact that Covid-19 would have on the Dubai property market. Compared with many parts of the world, Dubai’s tight restrictions of lockdown were thankfully behind us. All things considered, there is no doubt that 2020 ended well. By year-end, with pricing in the market escalating, along with buyer appetite, and indications of house prices bottoming out in the secondary residential market, the overall sentiment was positive. However, there was still a level of uncertainty at the start of 2021.
Thankfully, it wasn’t long before optimism prevailed – as the government strongly supported businesses and economic growth, demand continued to rise. Added to this, Dubai’s phenomenal handling of Covid-19 challenges, including a seemingly watertight vaccination plan, further boosted confidence. Soon we were seeing transaction figures reach highs
that had not been seen in decades, with a multitude of factors contributing to this ‘perfect storm’.
Three key factors included:
1. Loan-to-value increasing to 80 per cent for first time buyers
Only having to make a 20 per cent down payment made a massive impact on buyer demand – it was suddenly far more affordable to get on the property ladder.
2. Interest rates at an all time low
Flexible financing solutions from many of the region’s banks further encouraged buyers to enter the market. We saw some exceptional offers from lenders in Dubai, reflecting a trend which has been witnessed globally.
3. Desire to own your own space
Demand to own property is higher than ever, with month-on-month record transfers being registered by the Dubai Land Department. Even with the memories of lockdown fairly distant, we saw a fundamental shift in people’s perception of homes. Having personal space to feel safe, spend valuable time with family, and comfortably work from home has become more important than ever.
We saw many active buyers searching for homes with considerable outdoor space. But it wasn’t just secondary market villas and townhouses that saw a rise in demand; apartments with large balconies proved to be a huge USP for those still looking for the high-rise lifestyle.
The above factors, with the ongoing desire to own instead of rent, has driven the market forward. Most areas in Dubai have seen increased valuations – we even saw year-on-year hikes of 35-40 per cent in certain places.
All segments – including the luxury market – have seen substantial growth. Many investors are also looking to the short-term rental market for substantial returns, with this type of property seeing net ROI of 10 per cent.
NOW IS THE TIME
There’s no denying that the first half of the year has exceeded expectations. I strongly believe that the remainder of 2021 will continue to see growth. A steady buyer appetite will keep the demand healthy. And we can expect to see more sellers materialise as prices reach far more attractive levels compared with the record lows of last year.
I don’t see the market slowing down anytime soon. In the 10+ years of experience I’ve gained as a real estate broker in this unique property market, I believe the economic climate has never been more favourable to buy.