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Seasonality on Dubai Property market: Does Ramadan affect sales?
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Seasonality on Dubai Property market: Does Ramadan affect sales?

Seasonality on Dubai Property market: Does Ramadan affect sales?

 

  • ​There is a common perception that property sales slow down during Ramadan – is this true?
  • Our Research team has analysed monthly sales transactions in Ramadan over the last 7 years and came to the conclusion that Ramadan months were not necessarily the slowest.
  • David Godchaux, CEO of Core Savills: “One of the key reasons is seasonality. The holy month has fallen during the hot summer months over the last few years, and it has induced a bias in market players’ perceptions as these months coincided with the period of the year that typically sees lower activity levels”.

Ramadan is a month in the Islamic lunar (Hijri) calendar. Subsequently, Ramadan moves backward through the civil year as the lunar calendar lags behind the solar calendar by about ten days every year. The cycle repeats every 33 lunar years.

 

  • The slowest months on average have been August, followed by September and October over the since 2010, irrespective and slightly away from Ramadan.
  • Unsurprisingly, transactions peak towards the end of March, as well as June and December - which represent the end of Q1, Q2 and Q4 respectively.
  • Performance in March and December have an amplified effect due to financial year closures, while June’s peak is attributed to sellers and buyers attempting to make transactions before the summer lull.

 

  • Our research has revealed other factors that have a higher impact on sales than Ramadan:
     
    • Hot and humid weather in summer/seasonal changes
      ​​Winter and spring seasons (November to April) have been consistently outperforming the rest of the year (which is largely summer) by 10%. The lowest number of transactions recorded is in August, the hottest month of the year.
    • School calendar and travels
      • ​The majority of families travel during the school holidays and we noticed an increase in activity as they return, with a slightly higher number of transactions from September to November.
      • However, according to the findings of a YouGov survey (2016) of 1,523 people in the UAE, Saudi Arabia, and Egypt, 72% of respondents said they had no plans to travel during Ramadan, with most preferring to stay in their country of residence. This inclination further shows that Ramadan actually retains residents within the UAE, whether during the school holidays or not.
      • In the same survey, 43% of respondents said they expected to travel during Eid, which has kicked off the start of summer vacations in the past.
  • Regulatory changes 
    For example, when the transfer fee doubled in October 2013, that month was the slowest since 2011 to date.
  • Economy slowdown and oil price drops
    The transaction volumes obviously reflect that 2015 and 2016 are the slowest performing years.

      NB: The above transaction volumes take into account only sales transactions and not mortgage and off-plan sales.

Conclusion

  • The holy month of Ramadan has fallen in the summer season which records the hottest months of the year in the UAE and when residents travel abroad during the school holidays; these factors have resulted in a perception that Ramadan slows down property sales transactions.
  • However, as Ramadan moves away from summer over the next few years, we do not foresee the holy month as a factor which will impact property transactions negatively. 
    It is possible that the transaction process may be slower due to shortened working hours across private and government offices. 
  • David Godchaux concludes: “we expect Ramadan to be a better performer than previous years due to its early start in 2017, as we have witnessed so far in the first ten days. We also expect the number of transactions to fall early July (due to the start of school holidays and the hot season) until the usual recovery in sales volumes as of early September.”

 

Disclaimer:

This document is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document. Whilst every effort has been made to ensure its accuracy, Core Savills, accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Core’s research team. © Core Real Estate Brokers.



Source: Special Report