The delay of Expo 2020 could be a positive catalyst for the real estate industry, as it will help attract investors for ready residential units in the market. Developers have held on new projects and slowed down the pace of work on existing developments so they will be able to market existing stock to potential buyers ahead of the six-month long mega event, which is expected to attract 25 million people across the world.
The real estate industry is a key pillar of the UAE economy, and it has been going through a correction phase in recent years due to the widening gap between supply and demand.
Leading property developers had been rushing to complete their development projects ahead of Expo 2020, which has now been rescheduled to next year in the wake of the coronavirus outbreak.
The UAE real estate market is suffering from an oversupply, with more projects nearing completion, so the delay in World Expo, could help to resolve this key issue by affording more time for developers to sell their residential and commercial units, as prices become more affordable (https://www.khaleejtimes.com/business/real-estate/expo-2020-delay-a-positive-catalyst-for-dubai-real-estate).
In 2019, developers started off with projects that were set to provide at least 13,216 units by the end of the year. However, the actual completion rate with real estate projects is almost 40-50 per cent of that. Therefore, a total of 6,500 units saw actual completion in 2019. The momentum shifted towards the start of the new year and continued the spill over with more than 20,000 residential units completed from January to April 2020.
Developers targeted areas likely to be the most plausible options for the Expo 2020 site. Since the declared event site was more towards the Southern districts of Dubai, projects were launched there.
The start of 2020 brought about almost 5,000 residential units available for sale. According to Core’s reports, this brings the total number of residential units in Dubai up to 555,000.
This was all in anticipation of the massive influx of visitors the Expo 2020 was set to bring. Although the postponement of the event was unexpected, the launched projects were only going to see completion later this year. This therefore represents a potential opportunity for developers to complete projects and increase inventory ahead of the mega event in 2021.
Furthermore, developers should not slow down their projects, keeping in view the long-term bigger picture of the real estate industry. Dubai has emerged as a competitive and established real estate market and only those who will survive the current situation will be the ones that promote their projects to the right people at the right price at the right time. In addition to public listed real estate giants, some private developers have also been reporting good sales volumes despite the ongoing slowdown in the market because of their better marketing strategies and product offering through an appropriate platform. Real estate in Dubai is a ‘Buyer’s Market‘ at the moment and the developers will have to be innovative and competitive to sell their stock.
Even though the UAE economy is facing a significant challenge, the real estate market will continue to mature. Given the long-term nature of the investment that real estate has always had, it’s safe to say the market is going to survive and growth will come back.
Real estate consultants and agents claim their recent clients are in search of bigger living spaces. The pandemic has changed consumer behaviour and made a new demand for villas and townhouses, with numbers of transactions rising.
The Expo 2020 has postponed to 2021 and times are challenging but the desire for people to visit, live and work in the UAE has not reduced.
Alessandra Quarta Conte