Beginning his career in real estate in 2006, Haider Tuaima has witnessed the major swings of Dubai property market.
Mr. Tuaima, 55, has been living in Dubai for over 20 years. Now serving as the head of real estate research at one of the Middle East’s leading consulting and advisory firms ValuStrat, Mr. Tuaima delivers data-driven market intelligence to help his clients and beyond make informed decisions.
While the Dubai real estate market has been through a lot in recent times, including years of slumping prices, the veteran real estate researcher said supportive government policies, buyer-friendly mortgage rates and a pandemic-led work-from-home trend has helped put the city’s property market on track to recovery.
Despite some uncertainties, Mr. Tuaima believes the outlook of Dubai’s prime real estate in 2022 could be very positive with a successful Dubai World Expo. As the long-awaited mega event, which was postponed due to the pandemic last year, sets to kick off in October, the city is expecting more foreign investment and possibly the return of international home buyers who have been a major force driving the city’s high-end market.
Mansion Global caught up with the Dubai-based real estate expert recently to find out how the Covid-19 pandemic and delayed World Expo has impacted the city and what the real estate market there will be like in the post-COVID era.
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Mansion Global: What is ValuStrat known for?
Haider Tuaima: We are not developers, we are not brokers, we provide market research.
One of my responsibilities is creating an index for the market and trying to define where the market is heading for the U.A.E. and the region.
Generally, 90% of the population [in Dubai] is very much transitional, so people leave and new people will come, therefore the real estate market here is very difficult to gauge. That’s where my job comes in as you need a dedicated team to figure out and try to measure where the market is heading.
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MG: How has Covid-19 impacted the Dubai real estate market?
HT: Before Covid, in late 2019 and early 2020, the market was thinking that everything is going to be positive in 2020.
Then Covid came. Basically we went into lockdown; the Expo was postponed and market sentiment was hit hard. At least 90% of the market has been hit hard.
We don’t have any more international investors coming into the country because their countries were in lockdown. The inside domestic buyers were thinking they could lose their jobs because of Covid, and people have been laid off because of that. So it became very complicated and a very uncertain market.
Transactional activity was at a record low for the second quarter of 2020. So we reached the bottom in 2020. Between the peak of 2014 and the bottom of 2020, the Dubai real estate market lost about 40% of value.
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MG: Has the city bounced back from Covid shock?
HT: We definitely hit rock bottom last year, and now we are seeing very good growth.
The properties have become so affordable they became buying opportunities for many. In addition to that, banks started to offer higher loan to values. So before we were capped at 75% loan-to-value maximum, which has increased to 85% for first time homebuyers. At the same time, the government stepped in and tried to strike a balance between supply and demand.
The U.A.E. also rolled out probably the most ambitious vaccination programs, so the country is now really coming back.
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MG: What kind of properties are more in demand in Dubai now and how has it changed over the years?
HT: At the moment, I think there is a trend that is happening worldwide, not just in the U.A.E., which is [homebuyers are] moving toward bigger spaces. There is also a migration away from the city center.
In the last six to nine months, there has been a concentration on villas and townhouses transactions as people are looking for bigger spaces rather than sitting in an apartment when they are working from home.
A few years ago, there was more concentration on the off-plan market. So about three-quarters, perhaps two-thirds of real estate investments were toward the off-plan market, which are the properties that have not been built yet.
When the government stepped in, now we have less of that. So now the market has switched to the majority of investments toward existing properties. Good thing about older, existing properties is that in general, for the same budget, the older ones offer bigger spaces compared to those being built more recently.
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MG: Who are buying in Dubai now?
HT: Most of the demand right now is from domestic investors, especially in the high-end sector.
MG: Why are foreign buyers interested in Dubai and when will they come back to the market?
HT: Safety and security here is top notch. The whole city is a 24-hour city, and it’s very, very safe so people are attracted to the safety.
Also the majority of us speak English, and speak many languages, most of us speak more than one language. So whoever comes here from wherever they are, whatever part of the world, Dubai might not be home, but at least there is a support system where you will be no stranger and you will see people from all over the world.
The Expo is coming in a couple of months. Hopefully then the borders will open to other countries to come to this country, which means we will have investors from the outside, not just the domestic investors.
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MG: What’s the future looks like for the Dubai real estate market?
HT: Now that we have reached the bottom, we are starting to grow and the growth will be gradual, which is healthy.
The growth has been very gradual because we have so much supply coming in, particularly in the apartment sector. It will need a lot of time for all of these units to be absorbed. I think it will be a healthy growth going forward.
We do expect, between now and mid-next year, we will see an accelerated growth and so far it is definitely happening. Month on month we are seeing the difference.