The term "buyer's market" has been commonly used to indicate the phase that the Dubai property market is currently passing through. While on one hand, an inventory glut coupled with an increased supply pipeline has caused an ongoing correction in the sector, on the other hand, attractive payment incentives from developers, appealing government policies such as long-term visas, and the increasing affordability of buying and renting properties has created a near-ideal market for local, regional and foreign investors looking to invest in real estate.
According to a recent Dubai House Price Index report by Property Monitor and Cavendish Maxwell, the prices of houses in Dubai decreased 13.2 percent year-on-year in April 2019. However, Dubai housing and real estate, in general, continue to occupy a place of pride among investors. The market is seeing a rise in demand from not only traditional players, but also a new generation of millennials looking to make the most of the affordable prices of villas, apartments and commercial properties. For those looking to buy property in Dubai, now seems as good a time as any. But are investors likely to see liquidity in the market and a return on investment anytime soon?
"Prices are starting to stabilize. We are hoping to see more stability in capital appreciation and growth in prices from last quarter of 2019. Many businesses will start establishing roots from the third quarter of 2020, especially with the Expo 2020 around the corner, and Dubai real estate will be the main attraction for more than 25 million expected visitors and investors," said Nazish Khan, Chief Operating Officer of Fidu Properties, which is a leading Chinese company in the UAE property market.
"In my perspective, growth in ROI should not be very visible this year, but a huge jump in property prices is likely from the start of 2020. This will be a peak time when investors will try to hedge against their investments," Khan added.
Digital growth in real estate
Part of the UAE's Vision 2021 is to digitally transform its society. The real estate sector, which according to the Dubai Economic Report 2018 contributes to 6.8 percent of the Emirate's gross domestic product (GDP), has welcomed the digital drive with open arms.
The Dubai Land Department has pioneered the implementation of digitalization by becoming the world's first government entity to activate its blockchain strategy, which, among other things, looks to completely eliminate paper documentation, and replace it with digital records and digitally signed documents. In a paper-driven industry such as real estate, where investors tend to shy away due to time-honored, lengthy processes, the digital move has revolutionized the sector making transactions much more transparent and seamless. Agencies, developers, and investors have all benefitted from welcoming digitalization.
"Every real estate and development company has begun to depend a lot on digital marketing. We see more clientele coming in through digital marketing efforts. The ability to generate lead generation and close these leads have risen about 70-75 percent based on digital marketing alone," Khan said.
"There is a huge competition between developers and realtors on digital platforms/boards as they are all using the latest technologies. It’s not just about cultivating innovation; it’s about showcasing it too,” Khan added.
Source: Middle East Real Estate Predictions: Dubai | REIDIN, Deloitte
Even the government of Dubai has increased its marketing initiatives around the Expo 2020, with the general expectation that it will spur investments into the Emirate, specifically into real estate. For instance, the AED 10 billion ($2.7 billion) investment into the Metro lines and the buzz around it will not only boost real estate prices but also is likely to act as a catalyst for residential and commercial investment into its surrounding areas. A number of actions are being taken to maximize the potential of Expo 2020 and sustain the interest that is creating.
"With Dubai playing host to Expo 2020 next year, the city’s own technology credentials will be in the spotlight. The way in which Dubai responds to the digital economy will have a profound effect on the city’s future and the dynamics of its real estate market,” Khan concluded.