Dubai's property market expected to recover in 2021 on the back of Expo 2020

New property launches could come to a halt this year due to the impact of coronavirus, Damac’s chairman says

Hussain Sajwani, chairman of Damac Properties said on Thursday new property launches will come to a halt this year due to coronavirus pandemic.  Antonie Robertson/The National

Dubai's property market could bounce back strongly in 2021 on the back of increased economic activity related to Expo 2020, according to the chairman of the UAE's third-biggest listed developer.

Hussain Sajwani also said new property launches in Dubai, the commercial and trading hub of the Middle East, could come to a halt this year as the Covid-19 pandemic squeezes demand.

"If there is any silver lining in the subject, I don't think there are going to be any more launches," Mr Sajwani told Bloomberg TV in an interview.

The property chief said he expected most of the 2020 and 2021 property launches to stop.

“I think in October 2021, when the expo starts, we could see the market changing in a positive way,” he added.

The governing body responsible for Expo 2020 Dubai provisionally agreed earlier this month to delay the event for a year to allow time to overcome the challenges posed by the pandemic. It will move the start date of the six-month event from October this year to October 1, 2021.

Dubai's real estate market has slowed in the wake of a drop in oil prices that began in 2014, as well as ongoing concerns about an oversupply of properties.

Last year, the emirate formed a higher committee for real estate planning, headed by Deputy Ruler Sheikh Maktoum bin Mohammed and a number of senior property developers. It aims to balance the supply in Dubai's property sector through greater collaboration between government-related entities and private sector firms.

Mr Sajwani, who predicted a tough year for the property sector in 2020, also said the market offered good bargains for potential buyers.

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Where Dubai rents have risen and fallen, Q1 2020

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"Today I think it is a great opportunity to buy because products are selling in the secondary market below the replacement costs," he said. "I see a lot of customers coming and looking for a bargain especially from third world countries.”

Damac is not cancelling any projects due to the Covid-19 outbreak, he added.

“We are not under any pressures and we are not cancelling a single project,” he said, adding the company has only started two projects in the last two-and-a-half years.

“We have enough money in the escrow to build the entire projects without any delay," Mr Sajwani said. " We are focusing on the cash and the collection and we have given some discounts and incentives for people who are willing to pay. For new sales, we have reduced our prices by 5 to 10 per cent in certain areas, but we are not reducing more than that.”

Damac Properties reported its first full-year loss for 2019 in nearly a decade as revenue fell 28 per cent.

The company reported a loss of Dh36.9 million for the period ending December 31. The company had reported a profit of Dh1.15 billion for 2018.

“I think 2020 is going to be difficult and everyone is going to suffer. I think they (the government) are going to put a lot of plans for 2021 from the expo point of view, increasing tourism and creating more demand and that’s more important. Supply is not going to happen any more and supply will be halted,” Mr Sajwani said.