Dubai's real estate market has been slowly declining for the past decade or so. However, with Expo 2020 Dubai and the execution of the five to 10-year investment visas, the decline in the luxury property market specifically has slowed.
According to the Knight Frank's annual Prime International Residential Index (PIRI) 2020, the emirate's annual rate of decline has decreased to -0.7 percent in 2019 in comparison with the worldwide annual average growth rate of 1.8 percent. Dubai's current predicament with residential properties - which is mainly due to oversupply - is predicted to continue getting worse but at a much slower rate than in 2019.
"[...] continued project launches, coupled with rising levels of unsold developer inventory, continuing to place downward pressure on values," said head of strategic consultancy at Chestertons MENA Chris Hobden, according to Reuters.
The emirate of Abu Dhabi, on the other hand, is still in a severe downward spiral with an annual rate of decline of -5.5 percent. The significant difference between the two emirates can be traced back to a single factor, Expo 2020. The latter will launch in October and will run for six months.
A Reuters poll taken between Feb. 16 and March 2 predicted that residential property prices would drop 4 percent this year alone, with another 1.3 percent fall in 2021 before finally reaching a stable point in 2022.
However, UAE-based developer Seven Tides believes that the property market in Dubai will actually begin recovering this year thanks to Expo 2020. Government initiatives such as investment visas and beneficial payment plans also play a role.
Although the 10-year investment visa is considered a plus in terms of the city's property market, developers in the UAE have been urging the government to decrease the minimum investment amount from the current 10 million dirhams ($2.72 million) to a maximum of 4 million dirhams ($1.08 million).
These property developers believe that this decrease would be better for "investors, developers and industry stakeholders." In their opinion, lowering the amount of necessary investment to between 2 million ($544,484) and 4 million dirhams would in fact boost the property market.
With Expo 2020 just around the corner, Dubai alone is getting ready to receive over 14 million overseas visitors, CEO of Seven Tides International Abdulla bin Sulayem told Arabian Business.
"However, the lasting legacy of Expo 2020 when measured against Dubai's property market, will only be truly realised when international visitors return to Dubai, to invest, live and work here over the medium to long-term," bin Sulayem added.
In the last quarter of 2019, sales prices fell 1 percent and 3 percent for apartments and villas, respectively. On an annual level, the rate of decline recorded an 8 percent and 5 percent drop in apartment rents and sales prices, respectively, as well as 8 percent in villa rents and 10 percent in sales prices.
According to Dana Salbak, the head of MENA research at real estate investment and advisory firm JLL, Dubai's real estate sector will be lingering towards the bottom of the market throughout its stabilization period for the duration of 2020, until it finally reaches a steady rate. Nevertheless, a huge upward projection in the property market is not expected anytime soon.