Despite the global pandemic, Dubai has seen “impressive levels” of real estate transactions over the past few months, the chief commercial officer of a United Arab Emirates-based property developer said last week.
Aqil Kazim of Nakheel’s comments come even as real estate transactions in the second quarter of 2020 plummeted 38.8% compared to the same period last year. There were 5,559 transactions in the April to June quarter this year, down from 9,088 in 2019, according to the Dubai Land Department.
Kazim said these are “unprecedented times,” with the coronavirus health crisis having an impact on the market. The UAE has reported 62,525 confirmed cases of the coronavirus and 357 deaths, according to data compiled by Johns Hopkins University.
“But you know, despite these circumstances, we have witnessed impressive levels of real estate activity in the last few months,” he told CNBC’s “Capital Connection” on Thursday.
Jet skis pass by residential skyscrapers on the waterside in the Dubai Marina district in Dubai, United Arab Emirates, on Monday, June 8, 2020.
Christopher Pike | Bloomberg | Getty Images
Transaction volumes for the first half of the year fell 12.4% from the first half of 2019, after rising in the first quarter. The Dubai Land Department reported 15,883 sales from January to June in 2020.
That’s quite an “active performance,” Kazim said. “As far as Nakheel is concerned, we ourselves have sold more than 800 million dirhams ($217.8 million) worth of property since March, and that’s including during the height of the pandemic. This really highlights investors’ trust and confidence in Dubai’s real estate sector.”
Real estate services firm Asteco said the reduction of the loan-to-value ratio and a “partial release of pent-up buyer demand” resulted in an “immediate bounce” in sales toward the end of the second quarter, after movement restrictions were lifted.
Kazim said buyers are looking for larger gardens and living spaces for the “new normal” where people work from home and children learn from home.
“People have actually started to make that decision to invest in a property that they probably held back in the previous years because of this change in buying behavior,” he said, calling these end-user purchases a “commitment” to Dubai.
Consulting firm ValuStrat said property transactions may increase in the medium term.
“Price drops, lower lending rates and sweetened (loan-to-value) rules may encourage some potential buyers to make a purchase,” it said in a review of the market.
The emirate has been dealing with an oversupply in its property market, with prices and rents under pressure. Asteco said apartment rental rates have fallen 40% since the peak in the second quarter of 2014.
Rents for apartments, villas and offices could continue to slide, the report said. “Asteco anticipates that this pattern is likely to prevail, or even intensify due to the expected volume of additional supply combined with a potentially sharp drop in demand in the short-to-medium term due to the impact of COVID on employment.”