How Do Real Estate Professionals Feel About 2021 in the UAE?

Published December 22nd, 2020 - 04:00 GMT
How Do Real Estate Professionals Feel About 2021 in the UAE?
Dubai's largest real estate developer Arabtec filed for liquidation and dissolution after reporting overwhelming financial losses. (Shutterstock: pisaphotography)

Welcoming the end of a rough year, many business experts are trying to lay out their predictions for the new year in terms of recovery levels and pace, hoping that successful vaccines already rolled out in a number of countries around the world are going to support efforts of boosting the global economy.

The real estate industry has experienced a heavy year all around the world but in some of the MENA countries, especially ones that rely on a major expat presence such as the UAE, the road has been particularly bumpy, as thousands of non-citizens lost their jobs and had to head back home, causing a significant decline in demand for property in the country.

Earlier this month, Dubai's largest construction group Arabtec filed for liquidation and dissolution after reporting overwhelming financial losses since the COVID19 outbreak. 

Despite lack of accurate numbers of the financial damage endured by the industry in the UAE, experts have been reassuring investors that the UAE real estate sector will be almost fully recovered by 2022, pointing at a series of government decisions and incentives that have been announced with hopes that it can revive the economy as a whole, and the real estate industry in particular.

Knight Frank released a detailed report on how the Emirati real estate scene has been affected in Q3, showing a 6.4% decline in villa prices in Dubai by September 2020, while year-to-year volume transactions fell by more than 16% during the same period. It also highlighted Oxford Economics' forecasts of a 7.8% contract in the country's GDP.

During Q2, a similar report revealed that Abu Dhabi’s "residential sales prices fell 8.0% on average  in the year by May 2020," while rental rates "softened by 4.7% in the 12-months up to May 2020."

However, the sector's experts have a more positive outlook on how the industry will be recovering during the new year. A survey by the Cityscape Intelligence platform found out that 42.57% of almost 500 real estate professionals expect the MENA region’s real estate sector will see signs of recovery within 12-24 months. While 31.49% of respondents felt the market was expected to return to growth over the next 6-12 months.

These figures can be based on a number of factors that point at a series of decisions taken by the UAE government and businesses to support the industry's recovery as soon as possible, starting from new social rules that have relaxed rules on marriage, inheritance, and divorces for non-Emiratis, which is expected to make the country more-expat friendly. 

After signing the Abraham Accords with Israel last September, which formally set the ground for full diplomatic and business relations between the two countries, the UAE has also been trying to attract Israeli investments by opening restaurants that comply with the Jewish dietary law, in addition to places of worship, and most recently by opening Jewish schools and nurseries

Encouraging even more investments, Al Hamra Group has launched a deal in partnership with Ras Al Khaimah Economic Zone (RAKEZ) offering investors a 12-year UAE residency visa and a business license when they purchase one of their top properties in Al Hamra Village or Bab Al Bahr.

In a similar move, the UAE’s largest European property developer Kleindienst Group, who has created The Heart of Europe project, is offering EU passports for eligible buyers of its units.

In addition to the Golden Visa Program announced last May granting certain individuals longer residencies up to 10 years, the UAE government has launched a new residency program that allows individuals, who work remotely, to live in the country as they continue to carry out their daily tasks from their UAE homes.

All of these decisions are expected to drive investors' interest in the Emirati real estate sector, which is also expected to witness a recovery in rentals as soon as travel and business activities resume and return to usual.

What else can the UAE do to draw real estate investments back to the country? Do you agree with the optimistic sentiment towards 2021?

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