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The Impact of Positive Q2 Performance of Real Estate on Property Management Companies

Dubai’s real estate and property management sector is going through an interesting phase of transformation. Effective planning has enabled the city to navigate through the global economic slowdown and strengthen its property sector reforms. While the global property real estate sector was battling for its survival in 2020, Dubai’s real estate market was thriving like never before. The second quarter of 2021 has come up with more reasons to cherish for the real estate head honchos. Due to a decline in property prices & rental rates, the sector witnessed the highest number of transactions in the last two years. 

Dubai’s real estate market set a new benchmark, the highest in the last four years by value of real estate sales transactions. According to the Q2, 2021 Performance report by Dubai Land Department (DLD), 15,638 sales transactions worth AED 36.86 billion were recorded in Q2 2021. There was a quarter-on-quarter increase of 46.76% in sales value and 33.26% in volume.  A 5% of sales transactions were in the secondary/ready market and 38.5% were off-plan.

Dubai Real Estate Sector: Q2 2021 Performance Analysis

The bulletin issued by Dubai Land Department highlights the sector’s continued positive results in Q2 2021. Compared to Q2 2020, Q2 2021 showed an increase of 183.4% for volume and an increase of 237.79% for the value of sales transactions. When compared to Q2 2019, Q2 2021 showed an increase of 78.27% for volume and an increase of 102% for value.

In Q2 2021, 61.5% of all sales transactions were for secondary/ready properties and 38.5% were for off-plan properties. As far as volume of sales transactions is concerned, the off-plan market transacted 6,025 properties worth a total of AED 9.17 billion, and the secondary market transacted 9,613 properties worth a total of AED 27.68 billion. Comparing this to Q1 2021, the number of off-plan sales transactions in Q2 increased by 53.93% and the secondary/ready property sales transactions increased 22.91%.

June Performance Analysis:

Dubai’s real estate sector has maintained an increasing pace of performance, reflecting the vitality, flexibility, and attractiveness of Dubai’s property market by recording 6,388 sales transactions worth AED 14.79 in June 2021, which is the highest in value in eight years, specifically since December 2013 according to the 16th edition of Mo’asher, Dubai’s official sales price index, launched by Dubai Land Department (DLD) in cooperation with Property Finder

The sales transactions in June 2021 are 44.33% higher in terms of volume and 33.2% in value compared to May 2021. Compared to June 2020, June 2021 increased by 173.46% in terms of volume and 204.55% in terms of value. When compared to June 2019, June 2021 increased by 140.87% in terms of volume and 179.13% in terms of value. In June 2021, 62.2% of all sales transactions were for secondary/ready properties and 37.8% were for off-plan properties. 

The top areas of interest in terms of sales transactions for villas/townhouses in June 2021 were – Green Community, Mohammed Bin Rashid City, Dubai Hills Estate, Arabian Ranches 3, and Akoya. As for apartments for the same period, the top areas of interest were – Meydan, Jumeirah Lake Towers, Dubai Marina, Business Bay, and Downtown Dubai.

Dubai’s Skyscrapers are Standing Tall on the Expectations of New Investors:  

Despite all market uncertainties, the Dubai real estate sector has not lost its charm. The Dubai property market has been highly successful in winning the trust of both local & international investors. 

The areas that remained attractive for investors to buy villas/townhouses in Q2 2021 were – Mohammed Bin Rashid City, Dubai Hills Estate, Dubai Land, Green Community, and Town Square as per the bulletin. The areas that remained the top choice for apartment sales were – Jumeirah Lake Towers, Dubai Marina, Meydan, Jumeirah Village Circle, and Downtown Dubai. 

2021 has so far proved to be more positive for the industry as the demand-supply ratio is heading towards stability and is expected to remain relatively resilient to the effects of 2020.

Growth Drivers:

Rising cases of Covid-19, strict travel restrictions, lengthy lockdown phase, economic slowdown, and massive business losses due to lack of demand & job losses, were the top reasons for the global investors especially from Europe, India & North America to invest in the Dubai real estate market. There has been an enormous rise in the number of affluent investors from Britain, Italy, France, and Germany buying villas and holiday homes in Dubai due to rising cases of coronavirus in their respective nations. Even in the middle of the pandemic in 2020, the Dubai real estate market got a big boost from foreign investors. According to the data posted by Gulf News, in 2020, Dubai’s real estate market attracted 19,757 foreign investors, who concluded 24,666 investments worth over Dh35.6 billion.

The triumph of the UAE real estate sector is also attributed to its visionary national leadership for coming up with business-friendly measures like FDI laws, restoration of relations with Qatar, fastest and well-executed Covid vaccination drive, digitization, reduction of interest rates, Expo 2020, increase in LTV ratios for the first time buyers of the property, long-term residency visas, and launch of golden visa to offer a quick pathway to citizenship. 

What Does it Mean for Property Management Companies?

This exponential increase in the number of sales transactions to 15,638  worth AED 36.86 billion in Q2, means a large number of new properties will be ready to welcome their residents in coming months. Without a shadow of a doubt, it is a  sterling opportunity for the property management sector. The increase in the number of new units coming up will also create the demand for more property management and owners’ association services to professionally manage their communities & tenants. The glittering future belongs to those property management firms that can bank on this opportunity. Undoubtedly being a top 3 property management firm in Dubai with over 15+ years of industry experience and a brigade of over 100+ professionals, Kaizen AMS has an upper hand.

Kaizen AMS has always been well-prepared to cash this opportunity. The credit goes to ‘KAIZENers’ and  our continuous investments in adopting novel technologies such as: chatbots, AI, blockchain, Cloud, and big data to always be a front runner in the industry. Furthermore, Kaizen AMS hires world-class property managers who possess decades of industry experience to ensure the tenant satisfaction score in our communities always exceeds our expectations and industry benchmarks. All these efforts have enabled Kaizen AMS in becoming the first thought which comes to the mind of the developers when they think of an ideal property management firm.

Banking on its experienced, dedicated, and skilled workforce, brand image, and strategy, last year, Kaizen AMS witnessed a large number of prestigious real estate clients who came up with new units choosing us for their Property Management & Owners Association requirements in 2020. This is the reason that despite all market uncertainties due to Covid-19 & market slowdown, Kaizen AMS has witnessed a substantial increase in its profitability and new clients. We thank the UAEs visionary leadership for building a favorable business climate, fostering real estate spending, approving 100% ownership of businesses by expats , fastest ever covid-19 vaccination, and introducing business-friendly laws to drive foreign investments which have reflected positively on our balance sheet. There is absolutely no question mark on our great future. Kaizen AMS is all set to thrive and expand its client portfolio several fold in 2021 and in the years to come.