Dubai saw a fall of 42% in off-plan property transactions in March this year when compared to February while residential capital values dropped 10% over last year, said a new report on the emirate’s property sector.
The study by ValuStrat, a Middle Eastern property consultancy and advisory group, said the drops are due to the effects of the Covid-19 pandemic on the emirate’s real estate market, with home prices in several cases reducing to 2012 levels and the weighted average residential price per square foot slipping to AED933 per square foot.
“The COVID-19 coronavirus pandemic began to show its impact during the second half of March, as demand decreased due to the stay-at-home campaign supporting the nationwide disinfection program,” the consultancy firm said.
The restrictive effects of the lockdown and quarantines mean that prospective buyers are finding it difficult to shop for new properties. The curbs on movement worldwide are also keeping overseas investors away from the UAE market, experts have pointed out.
Haider Tuaima, head of real estate research at ValuStrat, was quoted as saying: “It is understandable that due to travel restrictions, foreign buyers would not be able to access the UAE market. Many local buyers have also put their property investments on hold due to the same lockdown measures.
“Prior to Covid-19 pandemic, the market was on a growth trend in terms of property purchases. For the moment, that trend seemed to be on hold. It is just too soon to measure what longer impact, if any, the economic consequences of Covid-19 will have on the UAE real estate sector.”
An increase in supply, low oil prices and strong dollar, along with caution among investors, had all contributed to property prices falling in the UAE since 2014. While the trend was projected to have been arrested by the second quarter of this year, there seems to be slim possibility of that for at least the near-term given the fallout of the Covid-19 crisis.