Coronavirus – Dubai Property Prices May Drop
The Coronavirus outbreak has disrupted lots of businesses – and home buying/selling are not left out. The pandemic, is causing a strain on Dubai’s real estate market. The global spread of the disease, could see Dubai’s property prices falling to levels last seen 10 years ago.
“We believe real estate prices are approaching levels seen at the bottom of the last cycle in 2010. Prices are even lower on an inflation-adjusted basis. Sales incentives for off-plan property are being considered, S&P Global Ratings said in a report.
“We also expect negative employment trends across some key sectors such as tourism and retail and certain Small and Midsize enterprise. This could weigh on demand for new properties by these businesses.
S&P rating action:
Emaar Properties and Emaar Malls’ BBB- ratings on creditWatch with negative implications.
Emaar Properties shares -43%; Emaar Malls -41%
Damac Real Estate lowered to B from B+; outlook remains negative, Damac shares -35%
Unlisted DIFC Investments’ revised to negative outlook from stable; affirms BBB- ratings.
“Dubai may at some stage see widespread temporary closures of business, similar to that in other regions. Work stoppages, including at construction sites, might be seen. This could lead to delays in future residential property deliveries,” according to S&P.
“This would increase working capital funding gaps for developers, including Emaar Properties and Damac Real Estate.”
Sales Drops In UK Housing Market.
According to Zoopla, a leading British property website, sales activities have fallen off significantly. The real estate website, said that demand from buyers over week ending March 22 was down 40% as compared to the previous week.
Mortgage providers in the United Kingdom, has already announced their plans for home buyers. Those who have already signed contracts will be given the option to extend their mortgage offers for up to three months. This will allow buyers postpone their moves to a later date, according to a statement from the UK Finance.
The policy will also help those whose moving plans have been disrupted by loss of job. The ongoing self-isolation policies and social distancing recommendation are also affecting moving plans of customers.
The Chief Executive of the UK Finance, Stephen Jones, in a statement said –
“It is clearly not appropriate for people shielding or self-isolating to move home. Therefore, lenders, conveyancers and other professionals are working together to enable these customers’ moves be delayed.
“The initial impact of external shocks is to reduce consumer confidence and put a brake on housing demand. Also, this is to reduce the number of people moving home, as seen in our latest figures, said Richard Donnel, Director of research at Zoopla.
Lenders may also be less willing to offer mortgages. This is because many customers could experience a drop in their income over the next several months due to the pandemic.