Strategy Note / United Arab Emirates

Dubai dichotomy: completed real estate vs Emaar off-plan

Dubai's completed real estate remains in the doldrums, falling c10% on average across all segments in 2019 (the residential segment is now c30% down from the 2014 peak, but still c30% above the 2010-11 trough). The only silver lining is that in the residential and retail segments, the rate of decline appears to be moderating (the same cannot be said for hotels and office space, where encroachment from the asset-sharing model may be at play).

This is despite the passage of about a year since a raft of reforms on visas (10-year for highly qualified professionals, 5-year for retirees, visa on arrival for short-stay tourists) and business licences (dual on and offshore licences, 100% ownership of onshore companies), and despite the much-hyped Expo 2020 being merely ten months away. 

In contrast, the off-plan sales bookings of the largest developer, Emaar Properties, which accounts for c70% of total off-plan launches, were up 25% yoy in 9M 2019 in value terms (although Q1 was almost double the contribution of each of the subsequent quarters).

The dichotomy between Emaar's off-plan sales and all other segments of the market is consistent with our view of Dubai's overall dichotomy between the "uber-rich" and most other segments of expatriate society (whether investors, tourists or residents). This is a theme we have explored previously – Dubai: The VIP Room, March 2017.

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