Dubai’s real estate market will not recover in 2021 as the COVID-19 shocks of 2020 will continue to impact the economy, S&P Global Ratings said.
Since the beginning of the coronavirus pandemic the property sector has been subdued. The oversupplied market has witnessed the number of empty homes increasing due to the outflow of expatriates after job losses.
Though sales activity has increased in recent months as buyers took advantage of low prices, the market is still lower than in 2019.
'Key sectors in Dubai, particularly real estate, will likely remain under pressure for the next 12 to 24 months,' S&P said in its report released on Monday. 'The residential real estate recovery would be led by cutback of new supply, assuming new launches by developers remain minimal, low mortgage interest rates that encourage residents to buy property rather than rent and declining prices that make investing in Dubai’s residential property attractive.'
Property sales transaction volumes this year will remain robust, which will be driven mainly by lower prices. As for the residential properties in the market, villas will be more attractive to investors as buyers prefer larger homes with private outdoor spaces during the pandemic.
S&P also expects that rent relief measures will continue to lead to declines in revenues and earnings of property developers, while “turnover rents” will become a more common feature in leases.