Property market activity, consumer confidence gain traction

Property prices continued to decline in Dubai and Abu Dhabi in the third quarter even as market activity and consumer confidence gained traction with the easing of pandemic curbs and hopes of a sooner than expected recovery, market analysts said.

“Slowly but surely, stability continues to be achieved in the UAE as market activity resumes and consumer confidence is restored,” analysts at Cavendish Maxwell said.

"The biggest indicator of this is the spike in property transaction levels in the third quarter versus the previous quarter, as investors and end-users act to secure quality spaces at attractive prices," said Aditi Gouri, head of strategic consulting and research at Cavendish Maxwell wrote in 'UAE Property Market Report'.

“Capital values remain under pressure in areas with excessive existing or upcoming supply while the more sought-after communities are experiencing stabilisation in prices, and even appreciation in certain cases,” said property consultancy in its report.

The report noted that the pandemic has changed preferences from living to shopping as people choose bigger and more open spaces to live in and increasingly adopt e-commerce as a preferred means to shop and dine.

“Property developers and operators across sectors must be aware of these changing preferences and will likely have to alter or repurpose upcoming project offerings.”

In the third quarter, average residential property prices in Dubai declined 11.7 per cent over the 12-month period from third quarter of 2019 and 4.6 per cent on a quarterly basis. Average apartment rents declined 15.9 per cent over the 12-month period from Q3 2019 to third quarter of 2020 and 5.9 per cent on a quarterly basis whilst villa/townhouse rents were lower by 8.9 per cent on a yearly basis and 2.0 per cent from the previous quarter.

In Abu Dhabi, average sales prices declined across major residential zones by 5.6 per cent for apartments and 5.3 per cent for villas/townhouses since first quarter of 2020, outperforming Dubai, said the Cavendish Maxwell report.

Rents in Abu Dhabi registered declines in the third quarter 2020 for both apartments and villas/townhouses. The average decline was 6.1 per cent for apartments from the first quarter of 2020 to the third quarter of 2020 compared to 6.2 per cent for villas/townhouses. During the third quarter of 2020, residential rents across the northern emirates continued the declining trend from previous quarters.

According to JLL’s recent market performance report, developers are expected to continue offering a range of incentives such as fee waivers, discounts, rent-to-own, as well as partnerships with banks to attract new investors and end-users looking to take advantage of the lower prices.

— issacjohn@khaleejtimes.com