The high rate of the construction is due to the balance between supply and demand. Moreover, the year 2020 will bring Expo 2020, a large international exhibition designed to showcase achievements of all nations.
The JLL Consulting Company notes that rental and housing prices continue to decrease for the reasons discussed below.
As a part of the 50-year development plan for Dubai and the launch of Expo 2020, an extensive development is in progress throughout the emirate. For instance, Emaar Beachfront has major projects already under construction, such as Beach Isle, Grand Bleu Tower, South Beach, Marina Vista, Sunrise Bay and Beach Vista. The price of the apartments in these residential developments starts at 1,300,000 AED (or USD 353,936). Among the variety of properties offered by Dubai real estate market, buyers can choose a house with the desirable location, interior design and appropriate price.
According to Asteco Property Management, the largest company in the Middle East that provides a full range of real estate services, the turnover of new residential facilities will affect the further decreasing of the rental rate in 2020-2021.
Dubai Land Department has announced an official price index in the real estate sector called Mo'asher. The system is designed to inform potential customers about the real estate market condition, including the average price of the property.
Since November 2019, monthly reports from the official price index show that the average capital value of residential property has fallen by 11.5%. According to Property Monitor, the real estate has become more affordable for residents of more than 40 districts in Dubai. This is also due to the wide variety of payment plans available to buyers. As a result, the residents of the city prefer to buy their own house rather than to rent one.
At the beginning of 2020 more than 5000 off-plan property sales have been recorded.
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The leading real estate agency Berkshire Hathaway Home Services Gulf Properties confirms that the off-plan real estate attracts more buyers due to favorable payment plans. For example, an apartment in Beach Isle, a residential complex by Emaar Properties, comes with the following payment plan:
The peculiarity of buying a property while it is still under construction is that its value is determined by the current market condition, and prior to completion, the price will increase significantly. This creates a high profitability of real estate investments.
The choice to buy real estate today is also influenced by the relaxation of mortgage. Dubai already has the lowest interest rates. Local banks can lower the down payment or loosen age limits.
However, the basic rules of financing continue to apply. For example, the mortgage is provided mainly to workers in the public sphere and large international companies, and their monthly income must be at least AED 5,000 (USD 1,361)
The difficulty in obtaining a mortgage had an impact on the fact that the developers had introduced a convenient payment plan with a down payment of 10-20% of the full price and the remaining amount being paid in installments.
Large-scale development allows landlords to offer their tenants a wide range of housing on the basis of their preferences - convenient location, proximity of necessary infrastructure, practical layout. According to local legislation, apartments for rent must be comfortable and serviced. Such conditions attract potential tenants.
In Dubai, rent is paid by bank cheques. There are three options: once every three months, 12 payments or one annual payment. The total sum of rent with 12 payments option is rather higher than a single annual payment.
According to Property Finder, the leading digital real estate platform, the average housing rent is 30% cheaper than in previous years. This is due to the fact that the owners of real estate are not able to afford simple housing while the market offers are increasing. Therefore, they try to attract tenants with flexible prices and convenient payment terms. Some even offer rent-free periods.
According to Asteco Property Management, in 2020 a new payment method will be introduced – a direct debit payments once a month.
According to the international consulting company Knight Frank, in 2020, major developers in Dubai will complete construction of about 63,000 residential units. The expansion of Dubai real estate market is an object of interest to foreign investors, who need to be sure about economic stability and a high ROI.
In addition, the inflow of foreign investment is due to the successful implementation of the Government program to cancel the tax on company profits and personal income, fully repatriate profits, and remove the residence permit as a requirement in order to invest.
The increased sales in the real estate market is also due to the fact that during the construction of residential property the developers take into account the needs of customers in order to maintain a balance between supply and demand. Damac Properties, one of the leading developers in Dubai, is the pragmatic one. The construction of housing units takes into account not only the purchasers' capabilities but also the following preferences:
According to the Department of Tourism of Dubai, millions of people from all over the world visit the Emirate every year, and the number of tourists increases every year. This is due to the special measures taken by the government to stimulate the tourism industry:
According to Tim Cordon, senior vice president of the hotel company Radisson Hotel Group, the Dubai tourist industry is expanding its borders and improving services for their guests.
According to the Government's estimates, about 20 million foreign tourists will visit the Emirate in 2020.
JLL consulting company reports that the real estate market in Dubai is expected to stabilize in 2020. The local government set up a new committee for real estate planning, and the leading developers focused on completing the existing developments. Foreign investors are expected to enter the real estate market with a wide range of options. In addition, the policy of the Dubai Government is to support small and medium-sized businesses:
A stable economy, favorable business terms and profitable prospects attract entrepreneurs from all around the world to do business in Dubai.
Conclusions
