Dubai rents may be bottoming out as ‘green shoots’ appear

The Dubai property market still faces supply challenges. (AFP)
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Updated 20 January 2020

Dubai rents may be bottoming out as ‘green shoots’ appear

  • An estimated 45,000 homes were completed in Dubai in 2019 according to Chesterton estimates

LONDON: Confidence may be returning to Dubai property despite a bloated market for off-plan homes, according to a report from Chestertons, the real estate broker.

Although apartment and villa sales prices were down 2 percent and 3 percent respectively in the fourth quarter of 2019 compared to the previous quarter, rental rates are stabilizing.

But supply issues continue to represent the biggest challenge facing the market, with 45,000 new units completed in 2019 and that expected to double this year.

“The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020 thanks to the slowdown of sales price declines and the leveling of rental rates,” said Chris Hobden, of Chestertons MENA. “This does, however, have to be tempered by the volume of new units scheduled for delivery in 2020, which makes the short-term recovery of prices in the emirate unlikely.”

In the rental market, no movement was witnessed in the fourth quarter with the market supported by a draft law which would fix rental rates for three years upon the signing of a contract. 

“To ensure high occupancy in 2020, landlords will have to be realistic in the face of tough market conditions. The incentives previously offered to tenants, such as rent-free periods, multiple cheques and short-term leases, will continue, with an increase in tenant demand for monthly direct debit payments also likely” added Hobden.


Coronavirus could hurt Dubai’s tourism, raises Oman risks: S&P

Updated 36 min 51 sec ago

Coronavirus could hurt Dubai’s tourism, raises Oman risks: S&P

  • ‘Virus-related travel restrictions, if not lifted as we expect, could weigh on the GCC’s hospitality industry, but more so in Dubai’
  • Oman’s economic downside risks were higher this year because of weaker oil demand and its exposure to China

DUBAI: Dubai’s hospitality industry faces the biggest risk in the Gulf region from travel restrictions triggered by the coronavirus outbreak, analysts at ratings agency S&P Global said on Monday.
All members of the Gulf Cooperation Council (GCC) — Saudi Arabia, the United Arab Emirates (UAE), Bahrain, Qatar, Oman and Kuwait — stand to suffer from the travel restrictions, but the business hub of Dubai could see the biggest impact, they said.
“Virus-related travel restrictions, if not lifted as we expect, could weigh on the GCC’s hospitality industry, but more so in Dubai, which received almost 1 million visitors from China in 2019,” the agency said.
Mohamed Damak, senior director, S&P Middle East & Africa, financial institutions, said there will certainly be an impact on visitors to the region, investments and potentially commodity prices if the virus is not contained by March and travel restrictions are not lifted.
In such a scenario the number of visitors expected to attend Dubai Expo 2020 will also drop, S&P said. Dubai hopes to attract 11 million foreign visitors for the six-month event that begins in October.
The virus has already killed more than 1,700 people and infected more than 70,000 and is yet to show convincing signs of peaking, with more than 2,048 new cases reported on Monday.
There have been nine confirmed cases of people diagnosed with the new coronavirus in the UAE. Most of those infected have been Chinese nationals.
Bankers attending a trade finance event in Dubai on Monday said coronavirus had not yet impacted trade flows in the Gulf but that corporates were starting to assess contingency plans in case Chinese exports are limited further over the coming months.
One local banker said banks had started seeing delays in documentation management for goods shipped from China to the UAE.
S&P analyst Zahabia Gupta said Oman’s economic downside risks were higher this year because of weaker oil demand and its exposure to China.
About 45 percent of Omani exports, mostly oil, go to China, making it the most exposed of the Gulf Arab states to developments in that country, said S&P. It forecast economic growth for Oman this year of 2.2 percent, up from an estimated 0.9 percent in 2019.
Fiscal deficits in the region will rise next year because of expected higher spending, lower oil prices and weak growth, Gupta said.
This year S&P expects oil prices to be around $60 a barrel and next year $55 a barrel.