Overcoming Covid-19: What The Real Estate Market in Dubai Should Do Now
For the real estate market in Dubai to recover successfully from the setback caused by the Covid-19 pandemic, we need to take a few steps backwards before leaping forward.Covid-19 has brought the world economy to an abrupt halt, causing a severe setback. Combined with the oil price drop and certain adverse geopolitical situations, the world is in a very fragile position. Decisions and initiatives that governments around the world take for the post-Covid-19 period are vital for determining the fate of their people and economies. As in the case with Dubai, this great city has time and again proven to be a resilient economy over the past years. Although the current situation is no different from the past difficult times Dubai has faced, the current situation is more challenging. But Dubai has always been ready for challenges. Needless to say, I am sure that we will overcome and emerge out of this situation even stronger. The real estate industry in Dubai has a significant contribution to the emirate’s GDP. To protect the share and help the economy navigate through the challenges that we are facing now, the government should put in place several permanent as well as temporary changes and initiatives.
My suggestions for the permanent changes include the following:
- Improve Permanent Residency policies for investors by making them more attractive.
- Create Pension Funds for residents in the city.
- Enforce Dubai’s Higher Real Estate Planning Committee to control and regulate all players in the industry, from developers to the smaller real estate service providers.
- Try to improve energy efficiency systems to lower the service fees further to improve returns.
- Constantly find ways to improve the administrative challenges in the sector by integrating technology in the majority of real estate processes.
My suggestions for the temporary changes include the following:
- Reduce land registration fees for a particular period to encourage first-time buyers and investors. For instance, it could be reduced to 2% from the current rate of 4%.
- The central bank needs to offer more to buyers with mortgages. For example, the bank could grant 85% for first-time buyers (expats/residents). Buyers who want to buy more properties for investment and as a second home could use 75%.
- Look at the city as a whole. Reduce new supply and come up with a strategy for the existing ready properties and communities to help improve rental yields.
- Find ways to support the integral service providers in the real estate sector to be able to recover and get back on track as soon as possible. A financial stimulus or fees reduction will help portals and brokers get back performance of the market.
- Reduce VAT on goods to a certain point that will not strain the government. But it should be enough to help create an excess of cash in the market. The excess cash could be invested in real estate as prices are very attractive now.