Pressure on Dubai’s property market increased due to the Coronavirus pandemic implications, falling 0.9% year on year in the third quarter, said a UAE central bank report, after they were little changed in the previous quarter.
The Coronavirus pandemic has added fuel to the fire in terms of property prices in the gulf country which has seen excess supply of new houses and apartments.
While the central bank said that rents in Dubai fell 6.9% year on year in the third quarter, continuing their declining trend, Dubai data showed property prices were stabilizing after a 3.5% decline in the first quarter from a year earlier.
In the emirate of Abu Dhabi, property prices fell 5.5% in the third quarter but quarter-on-quarter prices were up 0.9% while rents declined by 3.9% year on year in the third quarter.
Aside for the implications of the Coronavirus, accumulated problems caused the property sector prices to fall by more than 30% since 2014, as a result of rising supply. As a result, the managing director of Emaar Properties, the largest real estate company in the UAE, announced at the beginning of this month that the company had temporarily halted all new construction projects because of oversupply.
Last August the company recorded a 35% decrease in first-quarter net profits of the year, affected by the economic downturn caused by the Coronavirus pandemic.
Last march, a poll conducted by Reuters of 15 analysts and experts in the real estate market, showed that real estate prices will drop 4% this year and 1.3% in 2021 as a result of the chronic oversupply in the country.
The UAE economy is expected to contract by 6% in 2020, according to a central bank report, as a result of the Coronavirus pandemic and low oil prices, but is also likely to grow 2.5% in 2021.