UAE- lower costs and the accomplishment of continuing infrastructure projects also with the different supportive measures launched by the government in 2020 to relieve the economy will have a positive crash on the UAE housing market going forward, as per the real estate analysts.
The launching of a stimulus package by the Central Bank of the UAE was a shot-in-the-arm to the real estate market once lockdown restrictions were lifted. “We witnessed a gradual increase in demand, especially across the residential sector in H2 2020,” Richard Paul, head of Professional Services & Consultancy Middle East, Savills, wrote.
As per Savills “Property Report,” a dilution in LTV (loan to value) laws uplifted more investment appetite into the sector.
Hussain Sajwani, chairman of Damac, said in an interview on CNBC that fewer costs may be a great time for investors in search of buy. Now is a good time for the people to purchases real estate in Dubai, Sajwani said, approximating that resale units could price 10 percent less than a new development at this point. The market is likely to stay low for the next two years as the city regains from the pandemic, he added.
The Savills report said that the banks also increased their exposure to housing and the construction sector. And a stopper in re-mortgage activity was seeing due to attractive carrying rates and other valuable discounts. “The upfront deposits required to buy a residential property was reduced as individuals now have an additional 5.0 percent borrowing ability as part of the relaxed LTV laws. The Abu Dhabi government also waived off (for the entire year) real estate registration fee of 2.0 percent,” said the report.
Swapnil Pillai, the associate director, Research Savills Middle East, said as a result of these measures, transaction activity increased. “Individuals who were renting found it more affordable and lucrative to purchase their own property. A continued softening in asset pricing and completion of new projects in the last few months have offered a value proposition to end-users to upgrade their current real estate to better quality stock. However, the residential market witnessed a slowdown in demand from international investors due to restrictions in travel.”
In Dubai, a big figure of project completions over the last few years and handover of an additional 39,000 units in 2020 were among the primary reasons for general decreases in costs on yearly basis.