The United Arab Emirates’ real estate market has proved “remarkably resilient” throughout the pandemic despite an estimated 7.7 percent contraction in the country’s 2020 GDP, according to a partner at real estate consultant Knight Frank.
The country’s GDP shrank by nearly double the global rate of 3.5 percent in 2020, but shrewd fiscal policies have brought about more positive forecasts – with 1.1 percent growth expected in 2021 and 4 percent in 2022, according to a Knight Frank report released Sunday.
“Despite being presented with an unprecedented set of challenges in 2020, real estate markets across the UAE have proved to be remarkably resilient,” said Taimur Khan, Associate Partner at Knight Frank Middle East.
Core economic sectors including hydrocarbon, tourism, and retail were hard-hit by global lockdowns brought about by the COVID-19 pandemic.
Real estate saw a dip in 2020; there were 16.4 percent fewer residential transactions in 2020 than 2019. Average prices fell by 7.1 percent – but the fall was largely contained to apartment values as villa prices remained stable.
Recovery has begun in some areas, and certain locations even benefitted from the pandemic. Prime residential property in some areas saw a price increases – with the value of apartments and villas on the Palm Jumeirah increasing by 5.1 percent.
Residential sales prices in Abu Dhabi fell by 2 percent, although the rate was considerably slower than 2019’s fall of 7.5 percent. Average apartment prices fell by 3 percent, but villa prices were up by 2 percent – the first annual increase since 2014.
“Whilst both developers and investors recognize the downside risks bought about by the pandemic, they also understand that these are short to medium term risks in nature, rather than a long term shift in market fundamentals,” added Taimur.
“Despite some of the intrinsic challenges which real estate market faces, we remain optimistic in our outlook and believe there are pockets of opportunities across a range of market sectors.”