Home values, where overbuilding has caused a yearslong price slump, were already down 30% from their last peak in 2014
The pandemic and the resulting postponement of Dubai’s long-awaited World Expo, which was supposed to commence in October, ensures the city’s yearslong price slump will persist for at least another year.
“Last year, we said values would go down 7% to 10%” in 2020, said Haidar Tuaima, head of real estate research at appraisal firm ValuStrat. “Now 7% is very much on the optimistic side.”
The organization that oversees the world’s fair, the Paris-based Bureau International des Expositions, announced last week that its members passed an executive proposal to move Expo 2020 Dubai back a year. It will now run from Oct. 1, 2021 to March 31, 2022.
The decision comes amid the global Covid-19 pandemic, which has made large gatherings dangerous breeding grounds, devastated the travel and tourism industries and shuttered retail businesses—upon all of which the world expo depends.
Dubai has been planning for the mega event since it was chosen as the host city in 2014, beefing up infrastructure with an elaborate exhibition site, plus a multitude of new residential developments; more shopping centers and an expansion of its public transit system. Analysts expected it could bring in roughly 25 million visitors to the city, a boon for the local economy, including the real estate market.
It’s really too early to predict the extent of the economic fallout from the current crisis. Dubai went into total lockdown from mid-March through most of April, allowing residents to leave their homes only with an official permit, even to buy groceries.
Average sales prices in the city’s luxury communities are already down 20% to 30% from their last peak in 2014. But with the pandemic and now the postponement of Dubai’s heralded expo, market analysts broadly agree that home values, at the very least, will flatline in the coming year. Others, like Mr. Tuaima, say average sales price could fall by as much as 11% to 12% by the end of 2020.
Either way, the coming months present an opportunity for buyers with a long-term view—expats who’ve made a home there, local Emiratis, frequent visitors or investors seeking rental income; they stand to benefit from another year of discounts before Dubai Expo 2021 and diminishing supply potentially spur home values to rise again.
“We can very much say we’re at the bottom, or very close to it,” Mr. Tuaima said. After all, if even 2% to 3% of the millions of expo visitors in 2021 decide to open a business, move to the city or otherwise buy property, “that would be a huge amount of people and would play a huge role in absorbing supply.
via@MensionGlobal
