One-third of UAE residents expect property prices to increase or remain the same

The outlook for the next six months was mixed as owners and tenants attempt to absorb the effects of Covid-19

More than 70 per cent of companies surveyed in the UAE said they are taking steps to ensure the security of their supply chains in the wake of the pandemic, HSBC's survey found. Getty Images

More than one-third of UAE residents expect property prices to either remain the same or increase in the next six months despite the impact of Covid-19 on the country’s real estate market, a new study found.

While 28 per cent thought the market would be stable over the next two quarters, six per cent expect the market to rise. However, 28 per cent of residents expect the market to fall by 5 to 10 per cent over the period, according to the Home Sentiment Survey from investment and research company Peninsula.

The survey of 2,500 renters, owners and investors across the Mena region was carried out in the last two weeks of March, before most of the Covid-19 movement restrictions were put in place, in conjunction with Asset management group Eltizam, commercial real estate and investment company CBRE, Cityscape Intelligence and real estate consultancy Berkshire Hathaway Gulf Properties.

“Sentiment towards the market is more positive among homeowners than renters,” the study said. “In the past six to 12 months, homeowners think the value of their homes decreased by around 10 per cent. Whereas, in the next six months they expect the value of their homes to fall only marginally.

“Sentiment among renters remains stable, with the expectation of a further 5 per cent decline in rents as leases get renegotiated in the coming six months.”

The total value of real estate transactions in Abu Dhabi increased by 22 per cent to reach Dh19.2 billion in the first quarter of 2020 despite the "exceptional circumstances" the emirate faces in the battle against Covid-19, according to data from Abu Dhabi’s Department of Municipalities and Transport released last week.

The high value of the emirate's real estate trading transactions came after precautionary measures to contain the spread of the coronavirus in the UAE brought economic activity to a temporary halt. However, the restrictions are now easing with a gradual reopening of key sectors to support local retailers and businesses.

The Peninsula study also included the Peninsula Home Sentiment Index, which showed that overall sentiment towards the UAE real estate market improved in the first quarter of 2020 - prior to the Covid-19 response measures - with the index rising from 44 to 47.

"A score of under 50 represents, on balance, more negative than positive sentiment," the study found.

Half of the UAE home owners polled thought the value of their homes had fallen by at least 10 per cent over the last six to 12 months, while 87 per cent have no intention to sell in the next six months. Only 15 per cent planned to carry out renovations over the same period.

Meanwhile, more than a quarter of tenants said their rent has fallen by 10 per cent or more in the last six months and almost a third expect rates to fall between 5 to 10 per cent when their lease comes up for renewal in the next six months.

Other countries in the region have a more positive outlook for the sector with 48 per cent of those polled in Saudi Arabia expecting real estate prices to remain the same or rise, compared with 58 per cent in Bahrain and 91 per cent in Egypt.

The vast majority of tenants in the region also think the rent they pay is fair or good value, with 74 per cent of renters in the UAE, 62 per cent in Saudi Arabia, 92 per cent in Bahrain and 93 per cent in Egypt sharing this outlook.