2020 to set direction for Dubai property prices and rentals
Dubai — Residential property supply is set to hit an all-time high in Dubai in 2020 that will keep prices and rentals under pressure and help promote the emirate as most affordable market in the world, say analysts.
Real estate research firms predict that around 50,000 units will hit Dubai in 2020 due to spillover of expected handovers from last year. It is expected that the decline in prices and rentals will slow down this year as 2020 will be a pivotal year for Dubai’s economy and the real estate market.
Property analysts believe that 2020 will be a key indicator to ascertain where the Dubai’s property market stands now in terms of demand and supply balance and set the future direction for the prices and rentals.
Aditi Hariharan, associate partner for strategic consulting and research at Cavendish Maxwell, said some areas in Dubai are beginning to exhibit growth, which is certainly a positive sign for the market.
“We do believe that the rate of decline will slow down across others, but overall we still expect supply to exert pressure on prices and rentals on the overall market in 2020.”
Last year, she said apartment and villa prices declined 15 per cent and 18 per cent approximately, respectively. In terms of rents, it is 13.4 per cent and nine per cent for apartments and villas, respectively.
“Rents typically fall at a slower rate than prices, which has a positive effect on yields for the market as a whole. Rents will continue to fall in many areas of Dubai in 2020, but again, this is not a trend we expect to see across all areas of Dubai,” she said.
According to real estate consultancy Core, sales price dropped over eight per cent and rental rates declined on average nine per cent last year.
“We expect both rentals and sales prices to remain under downward pressure this year. However, in 2020, we expect the market to continue being occupier friendly, with underlying demand being met, evidenced by a steady increase in transaction volumes,” said Prathyusha Gurrapu, head of research and advisory at Core.
Within the first half of 2020, Hariharan expects over 50,000 units of residential supply to enter the market as developers hand over projects delayed in 2019, which could exert downward pressure on prices.