50,000 new units from projects under construction to hit the market early next year
How will things change for the Dubai property market in 2020? Have we hit the bottom of the property price decline cycle?
The emirate’s 50-year plan and the Dubai Expo 2020 will now be key indicators for demand-and-supply trends in the market.
Zhann Jochinke, chief operating officer of Property Monitor, says there are 50,000 new units from projects already under construction that will hit the market in early 2020, with apartments making up the majority of the upcoming supply.
Jochinke says developers have announced fewer than half the launches this year as of November compared to 2018 and seem to have instead focused on completing existing projects in their pipeline. “Past years indicate a materialisation rate of 40-50 per cent. It is likely that if the market maintains status quo, developers might deliver 60-70 per cent of the expected units during the year or might choose to pace deliveries to match demand at the time.”
With about 25 million visits expected during Expo 2020 Dubai, the wait now begins to see if the short-term Expo visits can turn into long-term residencies, which will give a further boost to the property market. And as we step into the much-awaited Dubai Expo year, here are some realistic predictions from our experts.
1: Expect rents to decline
With the release of more property in 2020, we expect rents to further reduce next year and into 2021. Good news for those who rent.
– Elaine Jones, executive chairman, Asteco Property Management
2: A market for tenants
There is now more choice in the market for tenants in terms of location, quality and value. Landlords need to keep property well-maintained and attractive to tenants. Professional property management and maintenance services will be in demand to ensure highest occupancy.
– Elaine Jones
3: New terms of rent payment
Expect new ways of rent payments such as direct debit monthly payments to become standard in 2020.
– Elaine Jones
4: Review your mortgage commitments
Regrettably for developers and those that have mortgage commitments, the outlook is tough. Capital values are unlikely to reduce any more as the cost of development itself is at the lowest practical level.
– Elaine Jones
5: Favourable cost of property
With the wide range of deferred payment plans being offered in the market, the opportunities to purchase property at favourable cost will appeal to end users who would otherwise be paying rent. According to the Property Monitor Dynamic Price Index, which tracks property price trends across 42 communities in Dubai, properties have become increasingly more affordable for a larger segment of the population.
Investors and owner-occupiers alike are displaying interest in purchasing properties – a factor that helps lift markets from the bottom – with November 2019 marking one of the strongest months in the past decade. A total of 5,025 sales were recorded with off-plan (Oqood) registrations representing 60.8 per cent, notably higher than the year-to-date monthly average of 55.4 per cent. Residents will definitely look at buying a home rather than renting one as prices have become more attractive.
– Zhann Jochinke
6: Good international investor appetite
The ownership structure and the ability to buy income-generating property at a good yield without capital gains tax and property tax represent excellent opportunities for international investors.
– Elaine Jones
7: Healthy balance between demand and supply
Developers will be more pragmatic when it comes to launching new projects and help create a healthy balance between supply and demand. They are likely to focus on creating the right kind of supply that aligns with the future aspirations of the city and its people.
– Amira Sajwani, senior vice-president, operations, Damac Properties
8: Buy off-plan
The trends for off-plan properties with extremely attractive payment terms will continue to attract new buyers.
– Dounia Fadi, CEO, Berkshire Hathaway Home Services Gulf Properties
9: More keys
With less than a year to go until Expo 2020 Dubai, there will be a great influx of tourists, higher number of hotels opening and rooms being occupied. China is becoming one of the biggest markets in terms of demographics operating in Dubai, and the hospitality sector will have to adapt its strategies and offerings to tailor to the needs of that audience.
Tim Cordon, area senior vice-president, Radisson Hotel Group, MEA
10: Support for SMEs and local businesses
Watch out for more diversification in the economy, which will create a robust economic environment. Once local businesses start flourishing it will become the foundation that will make investing in Dubai more fruitful for everyone. 2020 is the perfect platform to kick-start these initiatives.
– Dounia Fadi
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Collected and published by Arms &McGregor International Realty editorial team.