Dubai Property Market in 2020

This year has been a strange one, to say the least. The global pandemic had a significant impact on the economy all over the world, and while some industries managed to stay untouched and even thrive, some of them took a big blow. The Dubai property market in 2020 is the best example of that dropping 3.27% in prices. According to private developers, Dubai housing prices are now at their lowest, and the chances of them dropping even further are slim. Thanks to this, the Dubai property market prices are expected to either stagnate or slowly rise during the upcoming future.

Dubai Property Market Prices Fell by 3.27%

As previously noted, the Dubai property market prices fell by 3.27% in 2020. However, this doesn’t come as a surprise since the prices were declining already as a result of the demand-supply balance that has been achieved in the previous years. Not just that, but the global pandemic took its toll on all industries, which led to many people losing their jobs and financial security. Therefore, the majority of property investors decided that 2020 is not the best year to purchase apartments or houses.

We need to mention that the Dubai property market is known for being one of the world’s most volatile. Just take, for example, Q4 2011 when the housing prices dropped by 53%. The prices rose by 67% in Q4 2014, but they haven’t been stable ever since. Experts believe that the market will not have major swings, but the former examples show us that it’s not unusual to see volatile prices in Dubai.

Large Supply Exceeds Demand

Another reason why the Dubai property market prices are not expected to skyrocket during the upcoming future is that there is a large supply that exceeds the demand. A total of 56,000 housing units were added to the total Dubai residential stock back in 2019. It’s worth noting that 8,000 are located in Abu Dhabi. This brings the total supply to 575,000 units, according to JLL MENA.

We shouldn’t forget that the Federal Mortgage Cap (introduced in 2013) has slowed the value appreciation in Abu Dhabi and Dubai. That’s not all. The Dubai Land Department also doubled the property registration fee from 2% to 4%. The reason behind this decision was to dampen the overall property demand. Therefore, multiple factors have influenced the Dubai property market in the last couple of years.

Rental Yields Good Profits

Even though it might seem that the investing Dubai property market in 2020 is not a good idea if you are planning to sell quickly, there is one aspect of the market that has been booming. Rents are yielding good profits at 5.19%. The typical housing unit costs around $5,918 per square meter. The chairman of the Hobden Group is claiming that Dubai’s most popular communities are offering returns between 6 to 9.5%. This is quite impressive, especially when considering that other big cities, such as London, are running below 5% in terms of rental returns.