House sales in Dubai fell by almost half in the second quarter of the year despite the lifting of a lockdown on non-essential businesses at the end of May, according to a report by regional analyst ValuStrat.
The fall has increased fears over the longer term economic health of the emirate, given the importance of property prices to its financial structure and the effect of Covid-19 on demand.
Just 4,459 homes were sold between April and June, said ValuStrat.
The sale of completed units was down 57% on the first quarter and off-plan sales fell 44%.
The fall is likely to continue for some time owing to a predicted fall in the population of the UAE as the pandemic freezes the wider economy.
A report by Oxford Economics, published in May, estimated that employment could fall by 13% across the UAE’s emirates, leading to an exodus of some 900,000 people – around 10% of the population of the country – whose residence visas depend on their employment.
The consultancy expects the population of Saudi Arabia to fall by 1.7 million, for the same reason.
The ValuStrat report comments that there have already been “mass layoffs” by developers, banks and airlines.
It added: “The economy could face challenges resulting from a shrinking workforce significantly filled by foreign talent especially in the private sector. A decline in expatriate population could have a detrimental effect to the country’s overall economy.”
There were concerns about the health of Dubai’s property sector before the lockdown was introduced in March.
In December, property magnate Hussain Sajwani, the founder of Damac Properties, warned that the emirate faced “disaster” if it continued to build more properties than the market could absorb.
He told a conference in Abu Dhabi that there was a “glut of supply”, for which he blamed “the greediness of the developers”. He added: “If we stopped today, we’ll be okay. I think there is a demand for at least 15,000-25,000 units a year. If we oversupply more than that, we’ve got a problem.”
Image: Dubai imposed a lockdown between March and May (giggle/CC BY 3.0)