- Aldar expecting a quick recovery in the real estate sector
- Incentives by the government and developers have helped the real estate sector to recover
- A prominent gap in Dubai and Abu Dhabi’s stock for ready properties
The fact that COVID-19 greatly rippled industries across the globe certainly cannot be denied. Global real estate markets, too, suffered the impact of this pandemic. Statistics show that commercial investments, globally, witnessed a significant fall of 30% as compared to 2019.
The United States of America was hit the worst by this pandemic. Europe and the Asia Pacific, too, faced severe impacts of the novel coronavirus. Africa and the Middle East also witnessed an activity drop of 13%.
The effects of the pandemic were also visible in the UAE. Like other industries, the real estate sector, otherwise yielding exceptional results, also suffered a huge blow. However, the timely actions taken by the government in terms of announcing incentives for buyers and investors helped to soften the impact. The flexibility showed by the developers/sellers by making payment plans more feasible and affordable also encouraged buyers to take the plunge. The strong performance at the start of the year, before the COVID-19, made its way to the UAE, also helped the market to put up decent numbers in the 1st half. This, collectively, enabled the market to survive even during the testing times.
Having said that, MENA research head Ms. Dana Salbak is of the view that a further drop in property rates can be expected in Dubai and Abu Dhabi. In Dubai, the next 6 to 12 months could see a 10 to 15% drop. Abu Dhabi, on the other hand, can experience a 3 to 5% drop but at a comparatively slower pace. It will take about 12 months for the price drop to come into the picture.
Experts believe that both ready and off-plan properties will experience this drop. This makes it an ideal time for those looking to venture into Dubai and Abu Dhabi real estate market. Particularly, in Abu Dhabi, Saadiyat Island and Yas Island are popular projects featuring abundant opportunities for buyers and investors.
Available Resident Stock
As stated above, the rate of property rate decline is different in both emirates, Dubai and Abu Dhabi. This is majorly due to the difference between the supply gap. In Abu Dhabi, there are 260,000 residential units in stock. Whereas, in Dubai, the number of ready residential units touches 570,000. This clearly illustrates why decline rates are divergent.
Aldar’s Outlook on Real Estate Sector Recovery
Aldar, one of the leading real estate developers in Abu Dhabi, has reported a 2% increase in the net profit for the 2nd quarter of 2020. The development firm offered several incentives including waiving registration fees, the announcement of flexible post-handover payment plans etc. to encourage buyers. It also allowed buyers to make payments through credit cards.
The company, having headquarters in Abu Dhabi, also showed a 21% hike vis-à-vis year on year revenue. It was established in 2004 and since then, it has launched several successful residential, commercial and other projects including exhibition centres, shopping malls, a Formula 1 circuit. Successful residential projects include:
Mamsha Al Saadiyat
As per Talal Al Dhiyebi, Aldar’s CEO, taking into account the performance between March and July, the company has emerged out in a stronger position. It is due to the solid results it has produced. He also maintains that the shopping malls, staycation business and development side are showing signs of demand return.
Other than retail and hospitality, Aldar’s CEO also believes that there is potential in other segments. He maintains that the company plans to diversify its business portfolio as they are taking a keen interest in the warehousing and logistics sector. They are also focusing on PropTech (property technology).
As per Al Dhiyebi, the company hasn’t announced a new project launch in the current year due to the crisis led by COVID-19. However, they had yielded nearly $270 billion in the sales of off-plan developments.
Shedding light on the expected real estate trends, Al Dhiyebi said that he can see people showing more confidence in contrast to previous months. More and more people are now visiting shopping malls that have resulted in a sales boost.