Dubai’s property market became more competitive globally, as prime residential property capital values declined 3 per cent in the first half of 2020, while Seoul recorded the biggest price rise in the same period, Savills said.
Global prime residential prices fell 0.5 per cent due to the immediate impact of the Covid-19 pandemic and subsequent shutdowns that disrupted real estate markets, Savills’ latest Prime Residential World Cities Index report found.
“Global uncertainty was already weighing on prime residential markets in 2019, with modest falls of 0.3 per cent recorded in the last six months to December 2019,” Sophie Chick, head of Savills’ World Research department, said. “Combined, the annual average price movement turned negative for the first time since 2009, down 0.8 per cent for the year to June 2020.”
The Covid-19 pandemic has upended the global economy, dealing a blow to key sectors from aviation and tourism to shipping and real estate. Governments around the world rolled out massive economic stimulus packages to help companies and citizens survive the crisis.
In the Middle East, Dubai continued to record a drop in prime property prices and rents due to oversupply, similar to a few other global cities, Savills said.
However, with values averaging $560 (Dh2,056) per square foot, the city offers international investors relatively high yields for investment grade properties compared to global peers, according to Swapnil Pillai, Savills’ associate director of Middle East research.
Dubai could see an improvement in real estate transactions in the prime sector of the market for the six months to the end of 2020.
“The recently relaxed loan-to-value norms and lower bank lending rates should support a recovery in activity in the second half of the year, while a limited pipeline of new project launches should result in a positive long-term outlook,” Mr Pillai said.
Globally, Mumbai recorded the steepest decline in the global index of prime residential properties during the first half of 2020, with a 5.8 per cent drop.
In Asia-Pacific, Sydney, Hong Kong and Bangkok also witnessed declines as the impact of Covid-19 weighed on the market, Savills said.