Real estate sales in Dubai down 50% due to coronavirus

The decline in real estate values in Dubai accelerated in April while sales of apartments and villas dropped by about 50 percent due to the coronavirus pandemic, Zawya reported on Wednesday.

The monthly decline for residential capital values across the emirate accelerated from 0.8 percent to 1.9 percent in April, according to local consulting firm ValuStrat.  Compared to last year, the capital values as of last month were down 10.8 percent.

On average, house prices now stand at 915 UAE dirhams per square foot, not too far from the average rates during 2011 and 2012.

According to ValuStrat, there were fewer properties, including apartments, hotel rooms, hotel apartments, offices, workshops and retail shops that were sold last month, with cash-based sales transactions alone dropping by half compared to March.

“The COVID-19 pandemic continued to show its impact during the month of April as demand decreased due to the stay-at-home campaign supporting the nationwide disinfection program,” ValuStrat said in its latest note.

“[Based on] Dubai Land Department [data], April 2019 saw 2,198 unit cash or non-mortgage transactions [while] April 2020 saw 1,414 unit cash transactions,” added Haider Tuaima, head of real estate research at ValuStrat.

The property market has been showing signs of weakness since the start of the coronavirus pandemic due to worldwide lockdowns and mobility restrictions.

Other analysts, however, noted that there are signs that investor interest is returning, as the government has eased its containment measures.

Property Finder, in its late April 2020 report, noted that the number of rental real estate listings went up by 6 percent and 5 percent for sales. Rental leads for villas in Dubai also increased by 11 percent, a trend that was not observed prior to the lockdown period.

Enquiries from potential buyers who are interested to spend 1 million or upwards of 5 million UAE dirhams on villa properties have also been on the rise, according to Lynnette Abad, director of research and data at Property Finder.

However, it may be too early to say that the property market is back on a positive track despite the easing of restrictions.

“At the moment, there’s no evidence that the market is returning to the previous gains it saw during the first ten weeks of the year,” Tuaima told Zawya.

“It’s hard to say when upticks will start to show. Generally, the summer months are expected to be relatively less active. It would be interesting to see how the third quarter will perform,” he added.