UAE Residential Report, 2020 Review & 2021 Outlook

TRANSACTIONS GAINED PACE OVER H2 2020, SPURRED BY COMPLETED PROPERTY SALES

After a strong start to 2020, with UAE residential prices and rents showing more stability over the year’s opening months, Covid-19’s economic impact disrupted market performance from Q2 onwards.

The rental sector saw broad declines overall, with average apartment rents in Dubai and Abu Dhabi falling by 12.4% and 4.8%, respectively. While villa rents also fell last year, the pace of decline eased over H2, supported by a rise in post-lockdown demand for properties with outside space. Annually, Dubai and Abu Dhabi villa rents recorded declines of 5.3% and 3.6%, respectively.

Sales prices also faced downward pressure, although performance increasingly varied by property type and location over 2020. Average apartment prices ended the year 9.5% and 3.8% lower in Dubai and Abu Dhabi, respectively. In line with the rental sector, villa prices saw a more moderate fall, declining by 3.6% in Dubai and 3.4% in Abu Dhabi. 2020 witnessed the announcement of several new policy initiatives likely to support the UAE’s residential sector, including Dubai Land Department’s ‘fractional title deed’ scheme, Dubai’s new remote working visa and the launch of a new retirement programme. These initiatives should serve to bolster the market, and create new developer opportunities, moving forward.

While the UAE’s residential sector will likely see greater stability over 2021, with a broad economic recovery set to buoy market performance, we forecast modest declines in average sales prices and rents overall. Price trends will not be uniform though, and we expect demand for completed villas, across more-established residential communities, to continue over the coming year.