Dubai property prices continued to fall in March 2020 albeit at a slightly slower pace than the previous month, with prices declining 0.57% compared to 0.59% in February 2020. At AED 862 per sq ft in March, property prices are now down over 30% from the market peak in September 2014.
At 3,129, March transactions were lower by 27.9% on a monthly basis with the last two weeks of the month particularly being affected by the mobility restrictions in place to curb the spread of COVID-19. The wider impact on the real estate industry is expected to start to show only over the next six to eight weeks as transactions currently being recorded reflect sales that were agreed to earlier this year.
The Dubai Land Department has expanded registered trustee offices’ capacity to transfer property digitally, paving the way for transactions to continue. This measure coupled with the UAE Central Bank increasing the loan-to-value ratio for first-time home buyers by 5% will go a long way to help stimulate activity and stabilise the market. Two factors are expected to drive forthcoming delays. The first will be transactions that are currently pending where sales and purchase agreements have been signed but finance approvals are awaited. As valuers are unable to complete physical inspections, many of these transactions are on hold.
The other factor will be the viewings by buyers in the ready property segment which are currently not taking place. Whilst we are aware of initiatives extending to virtual inspections and viewings by surveyors and interested buyers, the actual decisions on deals are only expected to pick up once the restrictions are lifted.
The Property Monitor Dynamic Price Index (DPI) tracks trends of residential property prices throughout 42 key communities in Dubai and is indexed to a base period of January 2008. At an emirate-wide level, the index value for March 2020 decreased by 0.69 index points from 121.05 in February 2020 to 120.36, representing a month-on-month decline of 0.57%. The index was last seen at this level in August 2012 when property prices were AED 861 per sq ft. This month-onmonth decline represents the 21st month out of the past 24 months where prices have fallen across the Emirate.
In March 2020, property prices stood at AED 862 per sq ft, down over 30% from the market peak in September 2014 and now are now less than 10% away from market trough of April 2009. Year-on-year property prices have fallen by 9.8% and continue the remain in line with the trend of March 2019 where a similar year-on- year decline of 9.6% was recorded.
After recording stronger than normal performance in February, total transactions recorded in March were 3,129 which represents a 27.9% month-on- filter keeps 2018, 2019 and 2020. The Data Type filter keeps Buildings and Units. The view is filtered on Transaction Type, which keeps Off-Plan and Resale. month decrease, however when compared to March 2019 transaction volume was closer to the norm with only a 3.4% year-on-year decline. The split between off-plan and resale transactions was weighted in the favor of resale with 51.5% of properties transferred in March being transfers of completed property (Title Deed registrations) and is notably higher than the rolling 12-month average of 44.3%.