The United Arab Emirates (UAE) had been a property investment hotbed for a considerable period of time, driven by huge demand from those moving to the region.
Over recent years there has been a considerable amount of both residential and commercial construction creating a supply to the market greater than the demand. This oversupply has resulted in falling prices across all property types.
Property price review 2019
In Dubai property prices were recorded to have fallen considerably; average apartment prices declined by 15% and villa/townhouse prices declined by nearly 18% over the 12-month period from Q4 2018 to Q4 2019 according to Property Monitor. Similarly, rent declines in Dubai were reported to have been around 13% for apartments and 9% for villa/townhouses over the same period.
Abu Dhabi also saw prices reduce in the major investment zones, apartment prices dropped by 13% and villa/townhouse prices recorded an average decline of 11% in from Q4 2018 to Q4 2019. Over the same period, rental prices fell by an average of 12% across the investment zones.
Transaction levels in 2019 were extremely high, surpassing levels recorded in previous years, a sure indication that buyers are recognising the value in the current market.
Industry professionals believe 2020 will see a tide of change in the property market for the better. The United Arab Emirates (UAE) government has made important changes to policies that are set to have a positive impact on the property market across the UAE.
Key policy changes
With the policy changes brought around by the UAE government throughout 2019, It is clear that the country hopes to attract overseas investment and that it also wants to make the area a long term prospect for expatriates.
In September 2019, the Prime Minister and Ruler of Dubai, HH Sheikh Mohammed bin Rashid Al Maktoum announced that a higher committee for would be formed to work on ensuring there is a balance between supply and demand across the UAE’s real estate sector. Headed by HH Deputy Ruler Sheikh Maktoum bin Mohammed and senior property developers in the region, the body will also work to avoid duplication of developments and guarantee that new buildings bring value to the economy.
The Golden Card residency scheme which arrived in 2019 is set to have an impact on the property sector. These 5 or 10-year visas, for eligible entrepreneurs, investors, professionals and executives, will allow holders to stay out of the UAE for longer than 6 months. At the beginning of 2020 the government announced that visit or tourist visas will now be issued for 5 years where they had only previously been valid for up to 90 days. It is hoped that these initiatives will enable the expat community to plan for the long term and stay permanently.
Rental investment Dubai
2020 marks a year of significance for Dubai as it takes centre stage to host the Expo which lasts for 6 months and is predicted to attract 25 million visitors. It is expected that the event will act as a catalyst for economic growth, with professionals from around the world attending, the opportunity for new business relationships to be formed and developed and as a result to see growth in GDP.
The softening of property prices in 2019 has opened the floor to investors who can now take advantage of reduced entry prices that we do not expect to see again. Transaction levels were up in Q4 2019 compared to the previous quarter indicating that savvy buyers are acting on the opportunity.
Abu Dhabi rental investment
With both sales and rental prices becoming more competitive, 2020 is set to be an important year for the real estate market in Abu Dhabi with many new buyers expected to enter the market.
The way overseas investors can now purchase property in the region has changed; there is now the ability to buy property or land in 15 designated investment zones, where previously Abu Dhabi granted only a 99-year lease to investors it will now mean full ownership.
UAE property investment
Whilst real estate across the UAE has seen a slow down through 2019 it is not expected to continue. With multiple policy changes and actions being taken to both stimulate and better regulate the property market, and the Dubai Expo set to further boost momentum, 2020 is set to be an active year for property transactions, price growth and rental demand.
During a period when there is an increased supply of property to a market it is extremely important for investors to ensure they select the best possible investment option. If you are not familiar with the local property markets this can be a challenge and result in unnecessary risk-taking.
To discuss your plans for property investment please do contact our Dubai team via email at dubai@thirlmeredeacon.com.
