Impact of COVID-19 on real estate
The exact impact of COVID-19 is unknown, but any disruption to the real estate markets is likely to be a near term delay or a knee-jerk reaction, rather than a fundamental downturn over the long term. There will be inevitable impacts on economic growth, tourism, high-street retail spends, and so forth but there are also longer-term outtakes such as accelerating trends within flexible working, online retail and improving supply chain.
The strong fundamentals of the local economy including foreign currency reserves of more than AED 405 Bn and monetary measures introduced by the Central Bank will help weather any economic slowdown caused by the pandemic. Most of the companies across the UAE have been successful in implementing remote working options for majority of their staff, thereby ensuring business continuity and sustained economic momentum.
The real estate sector in the country has remained largely resilient during the first two months of 2020. The introduction of a stimulus package by the Central Bank will be a shot-in-the arm to the property market in the medium-to-long term. We have already witnessed a gradual increase in demand, especially across the residential sector in 2019 and a further relaxation in LTV ratios will encourage more investment appetite into the sector. Banks will likely step-up their exposure to real estate and the construction sector, a spike in re-mortgage activity may also be witnessed in the coming months due to attractive borrowing rates and other promotional discounts .