Coronavirus Impact on Real estate sector in UAE
As I am writing this, the pandemic Coronavirus has spread across 199 countries where 31,918 people have succumbed to death globally. It prompted governments all over the world including UAE curbing economic activities and issuing an advisory to stay at home.
It is now certain that crises like this would have a ripple effect in the economy across all sectors which is evident from crashing the global stock market. Slumping oil prices due to the ongoing price war between Saudi Arabia, USA and Russia are acting as a catalyst for accelerating the recession. All these global events spooking investors’ confidence and deterring them to invest their money. It is no denying of the fact that there will be short term dip in the economic cycle across all sectors but in the long run, it can be a blessing in disguise for the investors. According to me, Investment in the real estate sector in the UAE region can be a safe bet for them in the long run.
Here are the reasons why: –
7 reasons to invest in real estate
1. Any such crisis brings stimuli packages from the government. Recently the UAE government has announced AED 126.5 billion economic stimulus package aimed at mitigating the short-term impact of the virus. The package mainly focusses on reducing the cost of doing business and simplifying the business procedure.
2. Coronavirus has prompted the government to push the interest rate even lower by 75 basis points which means lower financing cost and an opportunity to invest in the sector.
3. The health care real estate sector is expected to boom aftermath of the crisis.UAE has a robust health care system equipped with resources and technology to keep its populace safe which would attract foreign investors to invest in this sector. According to the JLL report (Healthy returns) 2019, Over the next five years, there would ample opportunities to invest in the healthcare market across the MENA region owing to the aging population and increased demand for health care facilities.
4. With events like “Dubai Expo” and “Dubai international” boat show delayed but happening in the near future, it is expected that these events would bring a huge influx of tourists leading to a boost for the real estate sector.
5. The most hit sectors of these outbreaks are tourism, retail, and hospitality sectors which will gain traction in the longer term. The near-term impact can be recovered in 1 or 2 quarters of the economic cycle.
6. The current outbreak would affect the shopping habits of UAE residents, Online shopping would be more prevalent resulting in the requirement of more industrial space for managing inventory which would boost the real estate sector.
7. In the past few years, the government came up with Policy changes to boost the real estate sector in UAE. In Dubai, the government announced visa reforms in late 2018 which would encourage ex-pats to invest their savings in UAE. The government also launched “golden card” program in 2019 aimed at providing long term residency permits to intellectuals, executive directors earning more than 30000 AED.
If History is any indication, the global economy has recovered from the economic crisis over time in the past, in the shorter term every sector will face the skewed supply-demand problem but eventually, businesses will recover. UAE promises a conducive business environment backed by a stable government. The onus is now on investors to grab this opportunity by setting their business in UAE.
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