“A pessimist sees difficulty in every opportunity, an optimist sees the opportunity in every difficulty.” Winston Churchill.
These are unprecedented times. With the World Health Organization recently announcing COVID-19 a global pandemic, the reverberations have shaken markets to an extent not seen since the 2008 global financial crisis. BUT, like the global financial crisis, the market will return at some point – this is the nature of commerce, it does and will continue to go, in cycles. The opportunity now lies in the first shots fired by the UAE government to spur activity and stimulate growth.
To quote a Latin proverb, ‘Fortune favours the brave’; it has always been the frontiersmen who have taken the first steps that reap the greatest rewards when the markets do rebound. The first of the incentives the Central Bank has offered to the UAE property market is the lowering of the entry barrier for first time buyers to secure a foothold on the property ladder. With the minimum deposit required to buy a home previously being 25%, the UAE held the somewhat dubious title of being one of the most stringent property markets – this has now been relaxed slightly by the lowering of that entry barrier by 5%. Subject to the lender (and when factoring borrowing against statutory fees) this can result in the buyer being able to borrow up to a total of 84.5% of the value of their home. This level of affordability has not been available for nearly a decade. This affordability is set against the backdrop of what is universally reported as record low home values.
Noting the pace at which changes are occurring, this article may be dated very quickly, but the US have just cut rates to almost zero; with the Dirham pegged to the Dollar we may see a similar move from the Central Bank. Again, affordability being the key element of this potential shift. In the passing hours, Abu Dhabi announced significant stimuli including the abolishment of property registration and transfer fees. It could be that Dubai enjoys similar benefits shortly. Notwithstanding the current fears, there has simply never been so many positive arrows available within the buyers quiver. Let’s not be glib: we do need to recognize the fears associated with the current pandemic, but this should be within the context of other illnesses or viruses.
It is currently the fear of uncertainty, it is the continued expansive media coverage, it is the speed at which developments are happening, it is all very unsettling, but this too shall pass. Over the coming weeks or months the virus growth may settle as it appears to have in China, or our resilience to the constant alarm may increase to a level that this virus starts to form part of the background noise and the list of ailments it is currently compared to. Remember the small issue of global climate change/crisis? – this is a much more pressing issue but has been pushed toward the back of the press publications which are providing rolling coverage of the current troubling times. This too shall pass. What will remain are the opportunities which are being created by truly difficult times; the question is will you see the difficulty in those opportunities or be one of the frontiersmen?