The COVID-19 pandemic has sent ripples through global real estate markets.
According to property advisory & investment firm, Jones Lang LaSalle, commercial investments worldwide fell nearly 30% to $321 billion in the first 6 months of this year, compared to 2019.
The Americas were worst affected, followed by Asia Pacific & Europe, then the Middle East and Africa which saw activity drop 13%.
The MEA region was a relative outperformer, say JLL, due to the amount of pre-COVID deals that carried through into the first half of the year.
In the UAE specifically, and on the residential front, the company says the market could head lower still.
“COVID has definitely delayed hitting the bottom & we still have room for sale prices and rental rates to decline,” Dana Salbak, head of MENA research for JLL told Inspire’s Rebecca McLaughlin-Eastham. “In Dubai, we’re talking about another 10-15% from now until about the next 6-12 months. In Abu Dhabi, a decline is expected, but at a much slower pace. We’re expecting 3-5% over the next 12 months.”
Supply & demand
A primary reason for the divergent rates of decline between the neighbouring emirates, says Salbak, is the supply gap.
“In Dubai, you’re talking about residential stock of about over 570,000 residential units and that’s both apartments and villas,” she says. “Whereas in Abu Dhabi, you’re talking about 260,000 units. That shows you the quantum and supply of units in each of those cities.”
For those looking to invest in the UAE’s market during this time, JLL says some might be attracted to projects on Abu Dhabi’s Yas Island & Saadiyat Island, not least because of developers offering attractive payment plans.
Abu Dhabi’s leading real estate developer, Aldar, is a case in point. Its financial incentives of late have included post-handover payment plans, the waiver of registration fees & payment options via credit card.
Aldar’s outlook
Talal Al Dhiyebi speaks to Inspire Middle East
Headquartered in Abu Dhabi, Aldar recently posted a 2% rise in its second quarter net profit. Year-on-year revenue jumped 21% to more than $544 billion, driven by inventory sales & state projects.
Since it was established in 2004, Aldar’s projects have dotted the UAE's skyline, from shopping malls and residential projects, to offices, exhibition centres and a Formula 1 circuit.
At a time when Abu Dhabi’s real estate market is being underpinned by government fiscal stimulus measures and programmes to promote private sector growth, Aldar’s CEO gave Rebecca McLaughlin-Eastham the following update:
“Between March, April, June & July, things have definitely become more clear. We're coming out of the times of uncertainty in a much stronger position & we delivered solid results. We are seeing pockets of demand return, in our shopping malls and in the staycation business, but particularly on the development side.”
Growth & diversification
A bird’s-eye view of some residential areas at Yas Island, Abu Dhabi
When asked about how Aldar
