Markaz report signals sustained robust recovery for UAE’s real estate sector

Kuwait Financial Centre 'Markaz' announced the launch of its ‘UAE Real Estate Outlook H1 2021’ report that features indicators signifying positive signs of sustained recovery for the country’s real estate sector. The report highlights the significant rebound in real estate transactions in H1 2021, which was buoyed by confluence of factors including swift roll-out of vaccines, reopening of economies and attractive yields. Moreover, this will lead to a ripple effect and increase in prices. 

Bright macroeconomic prospects, underpinned by rising oil prices, a higher vaccination rate among its population and global events like Expo 2020 Dubai, are expected to stimulate the rebound of the UAE’s real estate sector for the coming years. The country’s economic recovery from the repercussions of the Covid-19 pandemic has been on an upward trajectory since the third quarter of 2020. Diminishing government deficit along with an increase in expenditure growth and improving employment rate further demonstrate the economy’s resilience.

The Markaz report highlights that investor-friendly government policies incorporated to mitigate the impact of the virus, such as the 10-year golden visa program and 100% foreign ownership of commercial companies, as well as the new reforms in mortgage lending and the efforts taken to restrict new supply are positives for the real estate sector and the investment environment in the country. Further, residential rental gross yields in UAE remain relatively high (nearly 6%) when compared globally. Adding to that, UAE have witnessed the highest population growth in the Gulf region. This along with long-term plans for urban and sustainable development under the Dubai 2040 Urban Master Plan are expected to incentivize investors who are looking for a steady stream of income.

In a positive step, the government increased mortgage lending limits by 5% in March 2020. In addition to this, Abu Dhabi removed property and mortgage transfer fees to ease the availability of financing and facilitate real estate transactions. Similarly, the country has launched initiatives, including the establishment of a higher committee of real estate, to achieve a balance between real estate supply and demand, considering that over-supply has caused the property market to slow down significantly – resulting in stalled projects, redundancies, and a lack of confidence in the sector. Separately, the Dubai Real Estate Regulatory Agency (RERA) has introduced a new law that forces developers to deposit 50% of the project's construction cost upfront compared to 20% previously to curb future supply.

In a bid to ease doing business in the country, the UAE government has announced full foreign ownership of commercial companies without the need for an Emirati shareholder or agent. The move is expected to liberalize the business environment and play a key role in attracting investments into the country. In yet another pioneering initiative in the region, the UAE launched a golden visa program to provide 10-year residency for investors, professionals, and students. While foreign students can sponsor their families under the long-term visa program, retired residents could enjoy the provision of a 5-year renewable retirement visa.

Full Report

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