Dubai's real estate market defies Covid-19 odds

The spillover effect from 2019 has resulted in a higher completion rate of property projects in Dubai this year, with over 20,000 units having been completed in the first four months of 2020 despite a slowdown in new project launches.

In addition, work on construction projects is also continuing at a steady pace as the sector has been exempted from the restriction of coronavirus, resulting in most of the projects going ahead with deliveries.

However, analysts believe that this pace may not be sustainable in coming months as developers could go slow on their projects due to the Covid-19 uncertainty and a one-year delay in Expo 2020 Dubai.

More than 15,000 apartments were completed and the top areas were Business Bay, Town Square, Downtown Dubai, Dubai Sports City and Dubai Production City. Over 3,800 villas/townhouses were completed and the top five communities were Akoya, Dubai South, Damac Hills, Akoya Oxygen and Hatta. Over 1,000 serviced apartments were also completed during the January-April period, according to Property Finder's latest data released on Wednesday.

This is compared to 15,060 total units completed in the January-April 2019 period, it added.

Prathyusha Gurrapu, head of research and advisory at Core, said due to ongoing Covid-19 restrictions, future handover volumes are expected to come down as construction timelines and supply chains are impacted along with softened demand.

"Further downward revisions are expected on supply forecasts as they will inherently depend on the period of the pandemic and the pace at which complete functionality returns coupled with buyer confidence as developers adjust to ongoing market conditions," said Gurrapu.

"In line with Expo 2020, many projects were planned for delivery this year. However, I believe not all of them will be delivered on schedule. We have just started Q2 of this year and in my opinion it's a bit early to judge and compare anticipated deliveries for this year with that of 2019. There are many reasons why any project can get delayed; it could be a result of financial slowdown our logistical handicap. Whether we like it or not, the pandemic has created financial as well as logistical crisis which will impact the deliveries schedule for this year," said Atif Rahman, director and partner at Danube Properties.

He noted that some developers might be struggling because of the challenges faced at sites and in the delivery of materials due to a global lockdown, while some might have lost interest in the project due to the economic slowdown; the challenges could vary from developer to developer and site to site.

"Despite the challenges, this is the best time to focus on completing the existing and ongoing projects. We plan to deliver 1,488 units across three projects - Glamz, Miraclz and Bayz - in 2020, with a combined sales value exceeding Dh1.12 billion," he added.

Rahman believes that supply will get curtailed, which should in turn help real estate rent and sale prices. "Add to that lower or negligible new project launches this year; all of this put together will only benefit the real estate industry in the long run. I am extremely confident and bullish about the future of Dubai real estate."

Farhad Azizi, CEO of Azizi Developments, said Dubai's property market will get more time to adjust its supply and demand situation and developers have the opportunity to complete projects in time for the Expo. Moreover, the excitement in the buildup for Expo will remain for another year, boosting anticipation and demand.

"We are working around the clock to complete our projects, especially now, at a time when a comfortable home is more important than ever before. While we have taken several precautions and we will continue to develop our projects at an accelerated pace," said Azizi.

- waheedabbas@khaleejtimes.com