How will the recent floods impact the Dubai property market?

As the devastating waters finally clear, real estate watchers may be wondering ‘what’s next?’ for the emirate... here’s our expert take.

It has been a couple of soggy weeks, but in Dubai things are gradually getting back to normal after the worst storm in 75 years.

While developers and maintenance firms have been working day and night to fix the damage, people have been asking us what we think the impact of this exceptional event is likely to be on the property market.

It’s a fair concern. Especially since footage of waterlogged Dubai was blasted around the world – a far cry from the usual images of glamourous new skyscrapers or record-breaking tourist attractions.

However, despite all the drama and distress, our experts believe that the ongoing impact on the real estate market will be minimal – which is good news for everyone.

Here are the main reasons why.
 

The government stepped in fast

Every country will deal with a natural crisis at some point, and it’s the response of the authorities that shows how stable a nation really is – and Dubai’s government acted fast and effectively.

As the storm raged, the emirate’s central operations rooms responded to more than 200,000 reports, with the joint effort of over 17,000 members from the security, emergency and interior entities, 15,000 members from the local authorities, and thousands of volunteers working together to combat the flooding.

Now, in a bid to speed up recovery, Emirates News Agency WAM reports that AED2 billion ($544 million) has been allocated for relief efforts that include repair of houses, while a ministerial committee has been tasked with assessing damage and disbursing compensation.
 

Developers were quick to show support

Backed by the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA), many top developers showed their genuine commitment to homeowners by also acting quickly to help the worst affected communities get life back on track.

Good examples are Emaar Properties who said it would repair homes damaged in the storms at no cost to the residents, while Dubai Properties has been putting flooded residents from hard hit Mudon into temporary paid accommodation.

And while construction regulations are already stringent in Dubai, there is also some talk of regulatory bodies looking at enhanced storm damage prevention measures for future community design.

“I would also point out that HH Sheikh Hamdan’s approval of AED40 billion worth of projects back in March under a public-private partnership model is going to deal with many of the issues flagged by this crisis and support transformative development right across the emirate,” commented Rennie Sanger, Senior Off Plan and Investment Consultant at haus & haus.
 

Residents view Dubai as home and won’t be put off

In the past, a natural disaster might well have scared some people off Dubai as a place to live.

But now the real estate market is so stable, and the quality of life so high, that in the same way a weather event in the UK or Australia wouldn’t make residents leave, people here will simply look for ways to better protect their homes from potential future storm damage.

However, it is possible buyers will start checking a community’s safety credentials before signing any deal...

It’s also worth mentioning that the cross-cultural togetherness seen during the crisis is another reason people will want to stay in Dubai.

Charlie Bannan, Managing Director at haus & haus said he was heartened to see the amazing support between strangers. “Whether that be helping barricade a house, providing temporary shelter, food, and water, or the efforts of local convenience stores to remain operational where possible for supplies. It was incredible to witness,” he said.
 

Homeowners and landlords will better protect themselves

An unavoidable side effect of the fierce storm has been landlords being battered by repair costs. Maintenance companies reported their phones ringing off the hook during the week, with many having to prioritise callouts.

This could now lead to a higher demand for annual maintenance contracts for apartments and villas – a positive market trend that was already on the rise – as property owners and landlords seek to protect themselves and get peace of mind.
 

Our prediction?

While Dubai has certainly been through the wringer this month, the emirate will bounce back very quickly with little impact to the real estate market.

After all, this is the city that dealt with the Covid-19 pandemic (arguably) better than anywhere else in the world.