Dubai's real estate sector witnessed the best first quarter in 2020 in the past six years until COVID-19 challenges began during the second half of March, according to a UAE property market report on Wednesday. Eight months prior to the pandemic and the stay at home campaign, sales transaction activity in Dubai was on a significant growth trend, said advisory firm ValuStrat in its May 2020 report, noting, on a quarterly basis, Q1 2020 saw cash sales of ready homes up 30.4 percent annually with no change quarterly. Despite the COVID-19 challenges which began to impact during the second half of March, this was considered as the best first quarter for ready home cash sales since 2014, it said. However, April cash sales transaction volume performance was just half of what was reported for March. Ready homes sales volume witnessed a steep monthly fall of 75 percent, off-plan homes sales declined 32 percent when compared to March, said the report. While properties developed by Emaar, Dubai Properties, Dubai Holding and Danube, topped the sales charts overall, the top off-plan locations transacted during April 2020 were in Dubai Creek Harbour, Jumeirah Village, Umm Suqeim Third, and Jumeirah Beach Residence, and most transacted ready homes were in Palm Jumeirah, Dubai Marina, Town Square, Arabian Ranches and Downtown Dubai, it said. In Abu Dhabi, the average citywide residential asking price per square foot declined 2.2 percent quarterly and fell 7.8 percent when compared to last year. "The average asking price for ready apartments stood at AED 1,178 per sq ft displaying a decline of 2.5 percent quarterly, and 5.9 percent lower than in the same period last year.For ready villas, the average asking price was AED 876 per sq ft indicating prices declined 1.6 percent quarterly and 12.1 percent annually," the report stated. With more than 40 years of experience and a client base of 1,000 corporations in the Middle East and North Africa, ValuStrat understands the region and has predicted the post-COVID-19 scenario for the UAE real estate market. While tenants in the UAE are likely to renew lease contracts in the medium term, the trend of falling residential rents will come under further pressure from job losses and salary reductions, said the report, adding that the would be end-users that have been doing due diligence for their first property might finally decide on a property purchase given that buyers may enjoy increased bargaining power during the current climate. In the post-Covid-19 world, the office market is likely to be impacted negatively due to a rise in remote work phenomenon. The Dubai Future Foundation predicted remote work could be the new norm after the pandemic. Currently, though, the UAE has the lowest remote workforce percentage of 10 percent when compared to the global average of 62 percent as per International Workplace Group. This statistic might see growth as companies in the UAE would reconsider implementing work from home policies and change their perspective and attitude towards remote work, it said. The report highlights the challenges of retail and hospitality sectors in the post-pandemic market. Though brick and mortal retail was on the decline in 2019, but innovative marketing techniques by malls and retailers are likely to bring the retail market on track, at least earlier than the hospitality sector. With international travel expected to be weak for the foreseeable future, the UAE's hospitality sector has rolled out offers for the residents. As early as April, hotels have launched special promotions including competitive monthly rates, flexible payment terms, and reduced rates with recorded evidence stating five-star hotels started to lower rates to 4-star and 3-star levels in an attempt to attract guests, these type of schemes could saturate the market in the medium term, it said.
