13 Expert opinions on Dubai's real estate market in 2020

Read what a range of experts in Dubai real estate have to say about this year

19 Jan 2020, words by Aneesha Rai in The Market

Dubai Opera

Despite market prices dropping & abundant supply, the Dubai property market has reached a 11-year high, according to The National. We asked various experts in the Dubai real estate industry to weigh in with their opinions about what to expect from the Dubai real estate market in 2020, the year of the Expo 2020.  Here's what they have to say:

Property data analysts

Ozan Demir, REIDIN

Even though the number of new launches have reduced this year the off-plan segment can be seen holding ground strongly indicating investor confidence in the market. We also have seen an uptick event in the secondary market transactions with 5% increase and reached 18,378 transactions.

- Ozan Demir, Operations & Research Director, REIDIN

"Even though softening in the both sales and rent prices continued in 2019 in the Dubai real estate market, transactional activity showed uptick event when compared to previous years. I would like to share 2019 Dubai’s real estate statistics which defines the components demand and supply side of the market.

 In the last 12 months, sales and rent prices in the apartment segment have fallen by 5% and 8% respectively. During the same period, villa sales prices declined 10% and rent prices dropped 8%. On a yearly basis, the volume of off-plan transactions have increased by 35% when compared to 2018 and reached 23,733 transactions. 

Even though the number of new launches have reduced this year the off-plan segment can be seen holding ground strongly indicating investor confidence in the market. We also have seen an uptick event in the secondary market transactions with 5% increase and reached 18,378 transactions. 

2019 recorded the highest number of residential units delivered in the last 10 years. Around 34,000 residential units entered the Dubai residential market within the year and the new addition of these units was the primary reason behind price declines. Majority of the developers will aim to complete their projects before or during the Expo 2020 event. The introduction of these units is expected to put further pressure on the prices. In September 2019, Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum formed a real estate committee to balance the gap between demand & supply. 

 Towards the end of December 2019, the Dubai Government approved the budget of AED 196 Billion from 2020 to 2022. For the fiscal year of 2020, the emirates approved a budget of AED 66.4 Billion which is the largest ever annual budget in Dubai's history. The announced budget will support the Expo 2020 event and Dubai Plan 2021, as well as Dubai's economy. The Dubai government has also announced a special reserve of 3% [AED 2 Billion] of the total expected expenditure in 2020 to support the Expo 2020 event, which is expected to boost the economy and stimulate the real estate sector. 

 Based on aforementioned real estate and economic indicators, we are expecting to see an increase in the real estate investment activity in 2020 with the help of more affordable real estate prices and sales & rental prices to stay on course mainly due to upcoming supply, international economic volatility, US-China trade tension, regional competition and geopolitical issues." - Ozan Demir, Director- Operations & Research, REIDIN

Haider Tuaima, Valustrat

2020 is expected to witness further growth in transactions as price declines become more insignificant and buyers have the upper hand in negotiating discounts towards purchasing ready properties and developers offering more attractive payment plans.

- Haider Tuaima, Head of Real Estate Research, Valustrat

"The fact of the matter is that the Dubai real estate market is currently a buyer’s one. There’s a clear trend of positive growth in the number of title deeds registered and it’s growing almost at an exponential manner since Q3 2018, in fact, the last quarter registered a four-year record of combined off-plan and ready cash transactions. This is happening on the back of a multi-year softening of capital values, with declines nearing plateau stage. 2020 is expected to witness further growth in transactions as price declines become more insignificant and buyers have the upper hand in negotiating discounts towards purchasing ready properties and developers offering more attractive payment plans." - Haider Tuaima, Head of Real Estate Research, Valustrat

Zhann Jochinke, Property Monitor

Looking ahead to 2020, the Expo is going to be a key indicator of where we stand in terms of demand and supply. But as long as developers focus on delivering what is already in the works and there are no unexpected increases on the supply side, we can expect to see stronger signals that point in the direction of achieving price stabilisation.

- Zhann Jochinke, Chief Commercial Officer, Property Monitor

"The question “Have we hit the bottom of the property price correction?” continues to dominate discussions as we enter 2020. Indicators currently provide mixed signals – 2019 saw the highest number of property transactions take place contrasted by an accelerating pace of price declines, which should ideally decelerate when the market hits a bottom. Supply remains the primary driver for price declines with our research indicating that over 50,000 new units from projects already under construction will hit the market in early 2020. 

 However, some corrective measures are being taken to address concerns surrounding oversupply. Developers announced fewer than half the launches in 2019 compared to 2018 and seem to instead focus on completing existing projects in their pipeline. The formation of the Higher Committee for Real Estate Planning also sends a strong signal to the industry that the Dubai government is prioritizing tackling the oversupply issue. Looking ahead to 2020, the Expo is going to be a key indicator of where we stand in terms of demand and supply. But as long as developers focus on delivering what is already in the works and there are no unexpected increases on the supply side, we can expect to see stronger signals that point in the direction of achieving price stabilisation." - Zhann Jochinke, Chief Operating Officer of Property Monitor

Property Portals

Lynnette Abad, Property Finder

As per Data Finder data, transaction level wise, 2019 had the highest amount of transactions since transactions were publicly recorded in 2008. The previous highest year was 2017, and 2019 was 3.29% higher in transaction volume than 2017. It is clear the demand is still there for Dubai property and we expect to see transaction volumes increase in 2020 leading up to the Expo.

- Lynnette Abad, Director of Data and Research, Property Finder

"The overall economy has had an effect on the real estate market, however there were efforts over the last year on the legislation side which were positive. In addition, the decline in prices and more affordable stock has spurred buying from both end-users and investors. As per Data Finder data, transaction level wise, 2019 had the highest amount of transactions since transactions were publicly recorded in 2008. The previous highest year was 2017, and 2019 was 3.29% higher in transaction volume than 2017. It is clear the demand is still there for Dubai property and we expect to see transaction volumes increase in 2020 leading up to the Expo. Due to the significant amount of supply expected to be completed and handover from now until 2023, this will continue to add pressure on both sales and rental prices in certain areas. As per Data Finder project and supply data, there were over 45,000 units completed in 2019 which was the highest amount of units completed in one year over the last five years. Overall, price declines have been healthy for Dubai as prices were inflated. Today, Dubai still enjoys a 6% gross yield which is better than any other major city in the world. We will most likely see a fabricated rebound for 2020, especially in the areas surrounding the event. The question is, what will happen past 2021 with all the new supply and the Expo long gone? This is where legislation, affordable housing, creating incentives from developers and perhaps a relaxed mortgage cap would come into play to balance things out." - Lynnette Abad, Director of Data and Research, Property Finder

Matthew Gregory, Dubizzle Property

Going forward, developers will continue to have a key role to play in ensuring that new projects add value to the market, and property platforms should continue to provide a transparent view of the market to support with driving investments.

- Matthew Gregory, Director, Dubizzle Property

"The real estate market continued on its journey through the property cycle, with rental and sale prices softening throughout the year. However, in 2019, we saw multiple government policies come into effect – from long term visas for investors, through to a committee for the off-plan market – which have all contributed to incentivizing investors and boosting their confidence. Prices in the secondary market continued to soften throughout the year with prime areas such as Palm Jumeirah, Dubai Marina and Downtown remaining to be firm favorites amongst buyers. 

While the EXPO will undoubtedly have a positive impact on the property market, there are multiple factors that will drive the growth of it in 2020. We can see that actions are being taken to maximize the EXPO’s economic impact, minimize market fluctuations and avoid any withdrawal symptoms once visitor numbers recede after the event. 

Going forward, developers will continue to have a key role to play in ensuring that new projects add value to the market, and property platforms should continue to provide a transparent view of the market to support with driving investments. This holds to be especially vital today as we see that UAE residents and investors can now raise their standards of living without having to spend more on rents and property investments." - Matthew Gregory, Director, Dubizzle Property.

Developers

Robert Booth, Ellington Properties

"In 2020, design-led homes in central locations will remain in demand while technology trends including blockchain will revolutionise the industry from a finance perspective and sustainability will undoubtedly remain at the forefront of key themes.

- Robert Booth, Managing Director, Ellington Properties

“We are confident of a positive year ahead for the real estate sector. It is encouraging to see that, increasingly, Dubai real estate is being viewed as a long-term investment rather than for short-term gains, which in turn has the positive effect of creating a more stable market. 

The 50-Year-Charter announced by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, followed by the UAE cabinet approving five-year tourist visas will continue to build on the city’s reputation as the place to work, live and visit. Furthermore, with Expo 2020 Dubai set to attract millions of visitors, there will be considerable interest in the city as a destination for high net worth investors. 

In 2020, design-led homes in central locations will remain in demand while technology trends including blockchain will revolutionise the industry from a finance perspective and sustainability will undoubtedly remain at the forefront of key themes. “Last year, we recorded continued growth in investor demand, with many endorsing our design- and customer-first approach. Much of this interest has come from markets such as Saudi Arabia in the region, and internationally from China, and we anticipate that this will continue as we progress in 2020.” - Robert Booth, Managing Director, Ellington Properties.

Ghassan Saroufim, Al Barari

"In the premium high-end real estate segment in particular we are noticing that home buyers are tired of generic claims of luxury real estate and starting to place more value on higher quality, unique, and differentiated offerings - moving away from overt materialism to simplicity, authenticity, and individuality.

- Ghassan Saroufim, Chief Business Development Officer, Al Barari

“Today’s home buyers are more conscious than ever. They are re-evaluating their lifestyle choices and now place a high value on their health and wellbeing. They are looking to live in a place where they can connect with nature and be a part of a community of like-minded people. 

 In the premium high-end real estate segment in particular we are noticing that home buyers are tired of generic claims of luxury real estate and starting to place more value on higher quality, unique, and differentiated offerings – moving away from overt materialism to simplicity, authenticity, and individuality. Creating a differentiated community now goes beyond having green parks and shopping centers. 

At Al Barari we elevate health and wellbeing as our core values and this mindset is reflected in the spaces to live, work, socialise, and play that we have created, designed with the increasingly conscious consumer in mind.” - Ghassan Saroufim, Chief Business Development Officer, Al Barari

Mohammed Zaal, KOA

The market is not as fast moving as it once was, but people are buying smarter and with a long-term view to stay in the region and make it their home. It's a positive trend for developers and for the country.

- Mohammed Zaal, CEO of KOA

“We have seen a growing trend toward property purchase as serious, long-term, personal investments. The market is not as fast moving as it once was, but people are buying smarter and with a long-term view to stay in the region and make it their home. It’s a positive trend for developers and for the country.” - Mohammed Zaal, CEO, KOA

Jyotsna Hegde, Sobha Realty

One of the key trends expected during the year is an increased focus on quality and distinguishing the real estate offering in order to bring value to the overall economy.

- Jyotsna Hegde, President, Sobha Realty

"In 2020, we expect to witness a positive turn in the UAE real estate sector and in Dubai specifically. The government has unveiled a number of strategic reforms to reinvigorate the sector and incentivise buying. This, coupled with the positive sentiments in the wake of Expo 2020, will boost the sector in the long-term. One of the key trends expected during the year is an increased focus on quality and distinguishing the real estate offering in order to bring value to the overall economy. This is aligned with the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. As such, it is essential for developers to maintain diversity in the real estate sector, and more importantly create unique living experiences that attract investments. Additionally, as the market begins to mature, developers will need to focus on remaining competitive and this can only be achieved through well-thought of residential projects that combine quality, convenience and comfort and address the needs of the growing UAE population." - Jyotsna Hegde, President, Sobha Realty

Abdulla bin Sulayem, Seven Tides International

Another important initiative which will impact the property market over the next 12 months is the creation of a new real estate committee which has been tasked with regulating the sector and developing a clear and deliberate strategy to ensure real estate projects are not duplicated and that they each individually add value to Dubai's economy as well as to avoid small private developers going against semi-government real estate companies - helping to rebalance the existing supply and demand dynamics.

- Abdulla bin Sulayem, CEO, Seven Tides International

"I firmly believe that we will start to see the overall property market recover in 2020 with Expo 2020 combined with competitive pricing, easy payment plans and low interest rates encouraging investment into off-plan residential developments in particular, and ultimately securing Dubai’s position as an attractive key market. 

With Expo 2020 now less than 10 months away, Dubai alone is gearing up to welcome more than 14 million overseas visitors during the event. The stimulus of the mega- event, which will yield an investment windfall of AED 122 billion (an average AED 12 billion per annum over the next decade) as well as creating around one million jobs over the same period is expected to positively impact the overall property market in the emirate. 

However, the true lasting legacy of Expo 2020 when measured against Dubai’s property market, will come down to how many of the international visitors return to Dubai, to invest, live and work here in the medium to long-term. 

Adding to this, another important initiative which will impact the property market over the next 12 months is the creation of a new real estate committee which has been tasked with regulating the sector and developing a clear and deliberate strategy to ensure real estate projects are not duplicated and that they each individually add value to Dubai’s economy as well as to avoid small private developers going against semi-government real estate companies – helping to rebalance the existing supply and demand dynamics. 

Looking ahead, we can expect to see a gradual recovery across the sector in the medium to long-term. However, competition will remain the biggest challenge with quality developments, built by reputable developers, competitively priced, in prime locations with unique features and guaranteed yields continuing to attract the lion’s share of investment, especially off-plan sales." - Abdulla bin Sulayem, CEO, Seven Tides International

Real estate agents

Andrew Cleator, Luxhabitat

This year, I predict a growing hunger from local, regional and international institutional funds and REIT investment vehicles looking for larger or multiple asset acquisitions. We could even witness an increase in real estate "tokenization" purchases as blockchain technology becomes more relevant to the industry, especially from investor interest in the Far East.

- Andrew Cleator, Luxury Sales Director

"Similar to 2019, it will continue to be very much a buyers market with tempting opportunities abound for both end users and seasoned investors alike. In addition, this year I predict a growing hunger from local, regional and international institutional funds and REIT investment vehicles looking for larger or multiple asset acquisitions. We could even witness an increase in real estate “tokenization” purchases as blockchain technology becomes more relevant to the industry, especially from investor interest in the Far East. 

 For sure the new longer term resident visa options and recently announced tourist visa’s in combination with the long awaited Expo and lower local interest rates following recent cuts in the federal reserve rates should all blend together nicely to create a healthy real estate appetite.The Expo alone is expected to bolster total visitor numbers to around a massive 25 million this year. 

I expect another tenants year with continued downward pressure on rents to due to the even higher than last years number of newly completed units to hit the market. 

As a result of the oversupply threat developers will of certainly had their wings clipped when it comes to new off-plan launches. This year we should see the larger conglomerate developers focus more on their under construction master communities with units still in the pipeline; Dubai Hills Estate and Dubai Creek Harbour to name a couple" - Andrew Cleator, Luxury Sales Director, Luxhabitat

Mohanad Alwadiya, "The Wolf of Real Estate", Harbor Real Estate

Looking forward, the market will continue to exhibit the symptoms of its imbalance in supply and demand with expected deliveries in 2020 to exceed 40,000 units with a longer-term pipeline for the following 4 years to exceed 120,000 units.

- Mohanad Al Wadiya, CEO of Harbor Real Estate

"We are now entering a new decade and, from a property Industry point-of-view we are looking forward to 10 years of prosperity. The decade that ended at midnight on December 31, 2019 can broadly be categorized generally as consisting of 2 halves. 

The first half witnessed a promising recovery from the ravages of the Global Financial crisis while the second half saw many of the gains from the first half disappear as the market became imbalanced and inefficient for a variety of structural, systemic and external reasons. Looking forward, the market will continue to exhibit the symptoms of its imbalance in supply and demand with expected deliveries in 2020 to exceed 40,000 units with a longer-term pipeline for the following 4 years to exceed 120,000 units. So, the supply side of the market will continue to hinder a return to market equilibrium in the short to medium term while the while the medium to long term will see the market approach equilibrium as the oversupply, already the focus of the recently formed Real Estate Committee, is reduced as new launches by developers fell significantly in 2019 and are expected to remain at comparatively low levels for the medium term. 

From a demand point of view, the news that Dubai sales transactions in 2019 Dubai were the highest in 11 years, recording a year-on-year increase of 20 per cent is an indication that the continuing fall in prices is finally starting to challenge buyer disinterest and reluctance. Total real estate transactions in Dubai of 41,988 for 2019 really highlighted how the combination of falling prices and unprecedented financing offers provided by developers could not be ignored by buyers any longer. 

 Over 55% of the transaction made in 2019 were for off-plan properties and the success of the affordability initiatives offered by developers along with investor inducements such as guaranteed rental returns will ensure that developer pricing and marketing strategies aren’t likely to change anytime soon. The demand for property resulting from population growth is key. 

The impact of the 2020 Expo on population growth will be significant as human resources are recruited into the Emirate specifically for the Expo itself and for the increased economic activity that will emanate from hosting the event. Foreign investment will continue to be a major demand driver for the industry and with 25 million visitors who are expected to attend the 2020 Expo, the opportunity for the industry to extoll its virtues as a safe and lucrative investment alternative is unprecedented. 

We can expect to see increased interest from abroad, particularly as initiatives such as long-term visas for investors and increased regulatory oversight on the industry and transparency regarding future supply pipelines represent compelling reasons to consider investing in Dubai. Of course, the industry will continue to be buffeted by Global uncertainty. 

The pace of resolution of many of the geopolitical events of the past five years that have hindered global economic growth and heightened global uncertainty are still some way from complete resolution. The industry will continue to be affected by these events and issues as they affect, not only factors such as economic performance, trade policies, exchange rates and monetary / fiscal policies of virtually every country in the world, but also the confidence of investors globally. 2020 will be better than 2019, but it will only be a small step towards total recovery." - Mohanad Al Wadiya, CEO, Harbor Real Estate

Mario Volpi, Engels & Volkers

In my opinion, 2020 will be the year of the holiday home. This sector of the market has been steadily improving in terms of availability and quality of accommodation for some time, however with 2020 being the year of EXPO, holiday homes will become an integral part of the real estate sector.

- Mario Volpi, Sales & Leasing Manager of Engel & Volkers

"In my opinion, 2020 will be the year of the holiday home. This sector of the market has been steadily improving in terms of availability and quality of accommodation for some time, however with 2020 being the year of EXPO, holiday homes will become an integral part of the real estate sector. The main reason for this is that there are currently not enough hotel rooms available should all be projected visitors descend upon us for the six-month extravaganza, this and coupled with the sheer number of people who are needed to be housed by the Expo itself. Going forward, Dubai is excellent at selling itself as a global destination to visit and the fact that many attractive events go on throughout the year such as the shopping festival and Dubai Summer surprises will undoubtedly keep the holiday home market growing positively." - Mario Volpi, Sales & Leasing Manager of Engel & Volkers