The real estate market in Dubai is likely to remain subdued for the next two years as the city recovers from the Covid crisis, according to a major Emirati property developer.
“I see, still, a soft market for [2021 and 2022],” said Hussain Sajwani, chairman of Damac Properties. That means there will be more potential sellers than buyers of real estate — and prices are likely to drop, he said.
Consulting firm ValuStrat in January reported that Dubai’s residential property prices fell 12.3% from a year ago.
Sajwani told CNBC’s Hadley Gamble that the company is unlikely to start many new projects in the current environment.
“We’re going to be continuously very careful, very cautious,” he said Wednesday. “We’re not going to launch a lot of projects, probably very, very little, if any.”
I am very, very positive on Dubai in the long term … supply will reduce and property prices will come back and come back strong.
Chairman of Damac Properties
Dubai has been plagued by an oversupply of property for years, even before Covid-19 hit. Prices have slipped some 30% since the previous peak in 2014, according to a ValuStrat report.
“We were having [a] soft landing,” Sajwani said. “And Covid made it [a] hard landing.”
Covid-19 took the world by storm in 2020, as the coronavirus swept from country to country, infecting more than 109 million people globally and killing at least 2.4 million people, according to data compiled by Johns Hopkins University. The pandemic decimated the global economy and few industries were spared.
With the pandemic and the lockdowns that followed, Sajwani said last year was “no time for people to buy property.”
There has been some demand, he added, but that has mostly been concentrated in luxury villas that are ready for buyers to move into.
Sajwani said now is a “great time” for people to buy real estate in Dubai, and estimates that resale units could cost 10% less than a new development at this point.
He expects prices to bounce back eventually and said the city will emerge from the crisis stronger.
“I am very, very positive on Dubai in the long term … supply will reduce and property prices will come back and come back strong,” he added.