Savills, the leading global real estate advisors, today revealed the results of its Lockdown Living Survey undertook online across the Middle East region. The survey was carried over the summer and captured the sentiments of individuals towards residential units pre and post lockdown.
Richard Paul, Head of Professional Service and Consultancy at Savills Middle East said: “After a prolonged period of confinement, people gradually emerged into a new norm of live, work and play as lockdowns eased across the region. Even though activity levels have bounced back, albeit still lower than pre-COVID levels, a general inhibition towards spending a lot of time away from the home has, in turn, led people to relook at their current residential space. In most cases, this means either relooking their current residential set-up and making necessary upgrades, or considering relocating to suit their newfound lifestyle. This has led to a marked shift in how residential spaces are perceived.”
According to Savills, before the pandemic, a few cities such as Abu Dhabi, Dubai, Sharjah, Riyadh and Cairo were witnessing a gradual improvement in demand. Though most of these markets have seen substantial supply addition in the last few quarters and have a sizeable pipeline of upcoming projects, transaction activity was gradual increasing year-on-year (breakdown per market and more details are available in the full report).
Since most countries in the region have a high share of expatriate population, respondents of the Savills Lockdown Living Survey were essentially from this segment. Hence, a large percentage of this population prefer to rent properties, and this provided an opportunity for investors to rent out a property with ease.
Swapnil Pillai, Associate Director Research Middle East at Savills, said: “This has also led to healthy yield level which in turn has driven investment activity. On the other hand, for developers, it means that along with the strong investor base, there’s a substantial pool of population that can be targeted for upcoming projects. A few developers have been successful in doing the same with the launch of innovative payment plans and schemes such as ‘rent-to-own’. Per our findings, close to 68% of the respondents currently privately rent unfurnished accommodations in the region. While the share of owner-occupied properties, both mortgaged or otherwise is roughly 18%.”
When it comes to choosing the right property, the price, the size and the proximity to work emerge as the apparent differentiating factor. “Given that majority of the respondents currently rent property in the region, prices become a key determinant when choosing a residential space. The onset of temporary salary cuts and redundancies has also ensured a more cautious approach towards spending. Since rents/mortgages form one of the biggest components of an individual’s/family’s monthly spend, our agents indicate a spike in enquiries for relocation and renegotiation to maximize savings”, added Pillai.
The current priorities when choosing a residential space are:
- Price – 23%
- Size – 19%
- Community amenities – 18%
- Proximity to work – 15%
- Proximity to school – 6%
- Space for home office – 5%
- Proximity to transport links – 4%
- Private pool and garden size – 5% each
Savills Lockdown Living Survey also indicates that that close to 47% of respondents have been encouraged to move in the next twelve months due to the pandemic. Majority of respondents prefer to rent as they adopt a wait and see approach to understand how the socio-economic landscape will evolve in the twelve months. Close to 21% of the respondents have indicated that they would be relocating in the next twelve months to save money. At the same time, 15% would move to downsize their space and save on rent. On the other hand, close 28% of respondents would consider moving to upgrade their lifestyle in some form.
On a global level, Savills results were promising, with 78% of respondents saying that most or almost all of the buyers in the areas they cover are still looking for a new property. Similarly, the majority of vendors across over 90% of markets surveyed are still planning to sell their properties. This sustained level of interest from both buyers and vendors bodes well for the resumption of the transactions as restrictions continue to ease.