Dubai’s real estate market has made a “hard landing” but lower prices may be a good time for investors looking to buy, according to a major Emirati property developer.
“We had a slowdown in the economy, and in the property market since [2018 and 2019], things were already coming down,” said Hussain Sajwani, chairman of Damac Properties. “We were having [a] soft landing … and Covid made it [a] hard landing.”
Now is a “great time” for people to buy real estate in Dubai, he told CNBC’s Hadley Gamble on Wednesday, estimating that resale units could cost 10% less than a new development at this point.
The market is likely to remain subdued for the next two years as the city recovers from the pandemic, he said.
“I see, still, a soft market for [2021 and 2022],” he said. A soft market refers to one where there are more potential sellers than buyers — and prices are likely to fall. This is sometimes also called a buyer’s market, because buyers have more bargaining power in negotiations.
Consulting firm ValuStrat in January reported that Dubai’s residential property prices fell 12.3% from a year ago, though prices rose 0.1% from December.
Sajwani said Damac Properties is unlikely to start many new projects in the current environment.
“We’re going to be continuously very careful, very cautious,” he said. “We’re not going to launch a lot of projects, probably very, very little, if any.”
There has been some demand for property, he said, but that has mostly been concentrated in luxury villas that are ready for buyers to move into.
Covid-19 took the world by storm in 2020, as the coronavirus swept from country to country, infecting more than 109 million people globally and killing at least 2.4 million people, according to data compiled by Johns Hopkins University. The pandemic decimated the global economy and few industries were spared.
Last year was “no time for people to buy property,” Sajwani said, pointing to the pandemic and the lockdowns that followed.
Still, he expects prices to bounce back eventually and said the city will emerge from the crisis stronger.
“I am very, very positive on Dubai in the long term … supply will reduce and property prices will come back and come back strong,” he added.