As restrictions ease across the country, a lot of people are curious to see how the real estate market in the UAE will fare post the pandemic. In our most recent episode of Bayut Real Estate Bytes, Dr Mahmoud El Burai sat down with notable industry leaders to discuss the COVID-19 impact on the UAE property sector. The experts discussed the impact of this unprecedented situation on property price trends and shared some insightful tips for tenants, buyers and sellers dealing with the financial implications of these challenging times.
Watch the full video of the latest episode of Bayut Real Estate Bytes, which was held via a Zoom conference call with the host of our show Dr Mahmoud El Burai.
He was joined by Rasha Al Khawaja, CDO at Equitativa, Mohamed Hareb Al Falahi, General Manager at Royal Liwan Real Estate L.L.C, and legal expert and lawyer Mohamed Al Ghanim.
Here are some of the highlights of what was discussed on the show about the impact of COVID-19 on the UAE property sector.
COVID-19 IMPACT ON THE UAE PROPERTY SECTOR
Directly addressing the main concerns of property seekers, Mohamed Hareb Al Falah and Rasha Al Khawaja shared their views about the changes in the market conditions once the UAE’s COVID-19 restrictions were imposed.
Mohamed Hareb explained that the real estate market in Dubai experienced a predictable slowing down when the restrictions were first introduced. However, transactions were still being made online. He also noted that the market quickly adapted and recovered as soon as the restrictions were lifted.
He said “With the restrictions easing, the real estate market has already improved and we expect this recovery to continue in the upcoming months. “
Rasha Al Khawaja agreed with this observation and also explained that the market experienced a digital transformation during the pandemic, with both users and agents adopting PropTech solutions to facilitate virtual property search in the UAE.
“Investors have been leaning more towards digital assets these days. Whether it’s viewing a property virtually or negotiating with the seller, digital solutions are making the whole process easier,” said Rasha.
UAE PROPERTY PRICE TRENDS POST PANDEMIC
Rasha and Mohamed Hareb also shared their expert opinions on the impact of COVID-19 on UAE property prices.
Mohamed Hareb observed that property prices in Dubai have experienced slight dips due to the current situation. As per his assessment, the rental market, in particular, has seen slight drops as tenants are negotiating for more affordable rents during these times. He also shared his personal opinion on how the average return on investment (ROI) will be affected by the pandemic.
He says “The yearly return on investment, in my opinion, was 8% in 2019, as well as Q1 2020, however, due to the current situation, it may go back to 7% or even 6%.”
Rasha also agreed with Mohamed Hareb’s comments about the impact of COVID-19 on UAE property prices.
“I agree that 6% – 7% is the expected ROI investors will receive. The Dubai real estate market is also changing. It is not the same market as it was 15 years ago. We also have to keep the evolving legal framework in mind. There are new real estate laws governing the market, which weren’t there years ago.” she said.
DEALING WITH PROPERTY PAYMENTS
Legal expert and lawyer, Mohamed Al Ghanim highlighted how investors and tenants can deal with different types of payments if they are facing financial difficulties due to the pandemic.
He clarified that according to the tenancy law in Dubai, a tenant must pay the rent value stated in the tenancy contract. However, tenants who are unable to pay their rents due to financial instability are entitled to request for a reduction of rent for the next year, provided they inform the owner 90 days before the contract is due to expire.
Mohamed Al Ghanim elaborated that tenants can use the RERA rent calculator to determine the market average to negotiate favourable rents.
“If the owner and the tenant are unable to come to a resolution and the landlord refuses to reduce the rent amount, the tenant then has the right to file a case against the landlord at the Rental Disputes Center (RDC),” he added.
Mohamed Al Ghanim also spoke about the legalities involved with postponing payments for off-plan properties.
“If both parties agree, payments can be postponed by amending the existing contract to reflect the new payment terms. This can be done by approaching the relevant legal authorities. However, if the payment is related to the stage of handover, all payments must be made on time, unless agreed upon by the relevant parties.”
IS NOW THE RIGHT TIME TO INVEST?
Concluding the session, Mohamed Hareb and Rasha Al Khawaja shared their opinion on whether investors should consider purchasing a property in the UAE during the current circumstances.
Mohamed Hareb said: “If you have sufficient funds and your situation is generally stable, it’s always a good time to invest in the Dubai real estate market. Prices are also currently reasonable, so you can get a good bargain.” Mohamed Hareb added that investing in real estate is always a good option, provided it is done with a long-term perspective.
Rasha mentioned that investors looking to buy properties must be well informed. She advises investors to ask themselves questions like “How much risk can you take?” and “What’s your income and security level?” before making a decision.
“You have to make sure not to risk more than you can afford. These things are very important. Hiring a financial advisor is also helpful. Take their advice but also learn from them.” she said
Those were the highlights from the recent episode of Bayut Real Estate Bytes. The impact of coronavirus on the UAE property sector has transformed the way the market functions but it is still full of opportunities for investors and tenants to take advantage of.
At Bayut, we’ve been committed to addressing the challenges and concerns that all the key stakeholders in the UAE real estate market are facing during this difficult time. Our advanced PropTech solutions such as 3D Live, Map View, TruCheck™ and many others have been a major contributor to the virtual property search experience in the UAE.