Savills: UAE real estate market to see slowdown in demand
Transaction activity by residents may increase, as a reaction to the Central Bank’s economic scheme
Following the official announcement by UAE’s Central Bank of a $27bn (AED100bn) economic plan, aimed at containing the impact of the COVID-19 outbreak, global real estate consultancy Savills has shared its real estate outlook.
Head of professional services and strategic consultancy for Savills Middle East, Richard Paul, said: “The exact impact of COVID-19 is unknown, but any disruption to the real estate markets is likely to be a near term delay or a knee-jerk reaction rather than a fundamental downturn over the long term.
There will be inevitable impacts on economic growth, tourism, high-street retail spends, and so forth but there are longer-term outtakes such as accelerating trends within flexible working, online retail and improving supply chain.”
Commenting on the effect of the stimulus package on the region’s real estate sector, head of Dubai office at Savills Middle East, Murray Strang, said: “The introduction of a stimulus package by the Central Bank will be a shot-in-the-arm to the property market in the medium-to-long term. We have already witnessed a gradual increase in demand, especially across the residential sector in 2019 and a further relaxation in loan-to-value (LTV) ratios will encourage more investment appetite into the sector.
Banks will likely step up their exposure to real estate and the construction sector; a spike in re-mortgage activity may also be witnessed in the coming months due to attractive borrowing rates and other promotional discounts.”
Transaction activity by residents may also increase, as a reaction to the Central Bank’s comprehensive economic scheme, according to Savills.
“A continued softening in asset pricing and completion of new projects over the next few months will offer value proposition to end-users to upgrade their current real estate to better quality stock.
"However, there is a possibility that the market may witness a slowdown in demand from international investors due to restrictions in travel. At a corporate level, key decisions relating to fresh office space requirements may get delayed or postponed, which may in turn increase the number of renewal activities as a knock-on effect,” Strang concluded.