property prices rise in Q1 as economic outlook improves amid vaccine roll-out
Dubai's property sector is beginning to reap rewards of the UAE's successful vaccination rate with real estate prices rising in the first quarter of 2021 and stabilising for the first time in five years, according to Tellimer Research.
"A more open living environment compared to lockdowns proliferating across Europe and South Asia, structural reform on residency visas and the UAE-Israel accord", are among the reasons for prices stabilising.
House prices in Dubai, the trading and commercial hub of the Middle East, increased modestly in January, February and March for the first time since 2016, indicating a steady recovery from the pandemic-driven lull.
The UAE's property market softened in the wake of a three-year oil price slump that began in 2014 and as a result of the Covid-19 pandemic, which pushed the global economy into its worst recession since the 1930s.
However, economic support measures and government initiatives, including visas for expatriate retirees and the expansion of the 10-year golden visa scheme, have helped in improving sentiment.
Dubai Expo 2020 and the emirate's new remote working visa are also expected to drive demand for properties. The Dubai 2040 Urban Master Plan that aims to make the city the world’s best to live in will further boost the real estate sector in the emirate.
Earlier this month, the Dubai Land Department said it was drafting a new law to keep rents unchanged for a three-year period ensuring properties are valued fairly and easing disputes between renters and owners.
The Covid-19 pandemic, just like in many other markets, has had an impact on the real estate sector, with an oversupply of inventories weighing on sales and rental prices. As a result, landlords have had to contend with lower yields.
The rent freeze, if approved, will bring stability to the real estate market and provide a clear picture of the value of properties in the emirate, the department, which is tasked with managing the real estate sector, said.
Rents across Dubai declined between 9 per cent and 17 per cent in 2020, according to international real estate services company Chestertons Mena.
Much of the reductions were in the newer areas, where tenants found better value in paying similar prices for more space in areas such as Mudon, Dubailand and Dubai South.
Prices of properties in Dubai are still down by 4 per cent year-on-year but the rate of decline is slowing and reform measures taken by the government will pay dividends, Tellimer said.
"Longer-term residency permits and more liberal business licensing, changes to the insolvency law, retiree visas and a path to citizenship," are net positive for the real estate sector, according to the report.