The worldwide real estate markets are suffering as a result of the corona epidemic. Because Dubai is experiencing decreasing earnings owing to a lack of oil profits and a high reliance on the real estate and tourist sectors, the emirate on the Arabian Gulf may be affected by the epidemic for a long time.
Property values in Dubai are dropping as a result of the Corona crisis. In addition, some big events postponed until 2021 may wreak havoc on Dubai’s real estate market.
The world exhibition and Real Estate Market Influence
Table of Contents
Expo 2020 was chosen as the host city in 2014, and preparations for the big event have been in full gear since then. However, owing to the corona epidemic, the global exhibition has been postponed until October 1, 2021.
Analysts predicted that the show would draw approximately 25 million people, making it a record year for the travel and tourism sector.
To prepare for the World’s Fair, the government spent billions on infrastructure projects, housing complexes, and public transportation improvements. Unfortunately, these massive expenditures and dwindling revenue result in a significant increase in the yearly budget’s burden.
Dubai’s real estate sector has seen a significant decrease in prices
Since 2014, property prices in Dubai have dropped by 20 to 30 percent. “Last year, we predicted that home values would decrease by 7% to 10% in 2020,” says Haidar Tuaima, ValuStrat’s Head of Real Estate Research. Meanwhile, according to Mansion Global, the expert believes that 7% are still extremely hopeful. Sales prices are expected to decrease by up to 12% in 2020, according to analysts.
As a result, the corona crisis may favor buyers. Before the coronavirus, according to Lynnette Abad, director of research and data at Property Finder, demand for real estate was already increasing due to the upcoming world exhibition. As a result, the repeated price decrease may be a once-in-a-lifetime opportunity to join the Dubai real estate market.
Dubai Real Estate Has Not Died
Foreign buyers flush with cash have rushed Dubai’s high-end property market, one of the few locations in the globe where they can eat, shop, and conduct business in person. Yet, at the same time, vaccinations roll out unevenly across the world, and waves of illnesses compel governments to extend restrictions.
So, in this boom-and-bust market, they’re scooping up record amounts of luxury villas and penthouses, driving up prices. Compared to the same time last year, sales of Dubai’s premium homes increased by 230 percent in the first quarter of 2021. According to Property Finder, the country’s biggest real-estate website, prices in specific high-end neighborhoods have risen by as much as 40%.
According to real estate consultant Property Monitor, a total of 90 homes for a total of 10 million dirhams (US$2.7 million) changed hands in March, shattering a record set eight years earlier. In the year 2020, there were just 54 such transactions.
“Tons of people are rushing in and purchasing multimillion-dollar homes on the spot, with no due diligence,” said Matthew Cooke, a partner at consultant Knight Frank who oversees penthouse sales on Dubai’s artificial island, the Palm Jumeirah.
Cash buyers began scooping up houses at low prices and reselling them for profit, as they had done in past cycles. According to analysts, this will continue until prices climb too high and returns begin to dwindle.