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Dubai’s residential property market is on a steady course, with prices expected to rise modestly over the next couple of years, according to a Reuters poll of housing analysts who say property prices there will remain affordable during that time.
Following a successful vaccination campaign, the economy has made a rapid comeback from the pandemic in the city-state, according to records from the Dubai Land Department, and has engulfed the real estate market, with continued growth in sales.
Dubai home prices were projected to rise by 3.0 per cent this year and 2.5 per cent in 2022, compared to 1.1 per cent and 2.8 per cent expected three months ago, according to a Businesshala poll of 11 property analysts taken from August 11 to 19 According to the survey.
This modest outlook stands in contrast to other world property markets such as Canada, Australia and New Zealand, where already record-high home prices were expected to rise by double digits this year, pushing the limits of affordability.
“Overall prices are still down about 36 per cent from their previous peak in 2014, so relatively we are still a long way from the previous peak,” said Faisal Durrani, head of Middle East research at Knight Frank.
“And the recent growth is certainly suggesting that the market has started to bottom out in some pockets. At the top end of the market we are probably seeing a faster recovery than anywhere else. For some, like apartments We are not expecting a sharp increase in prices and as fast as it has happened in the case of villas.”
A regional powerhouse of trade and tourism, the economy of the United Arab Emirates – a federation of seven emirates including Dubai – is expected to grow 4.2 per cent in 2022 according to a Businesshala July poll. The central bank of the UAE pegged it at 3.8 per cent.
Nine out of 11 analysts said activity in the Dubai housing market would increase in the coming year and two said it would remain the same. No one expected it to fall.
Of the analysts who answered an additional question, five out of 11 said a sharp uptick in the economy was the biggest upside risk to the housing market outlook in the coming year.
Anuj said, “Immigration reforms, trade liberalization and (the) 2040 masterplan are all giving a major boost to Dubai’s economy. The Dubai Expo will also boost economic activity. This essentially helps in attracting more FDI and indirectly benefits the overall real estate market.” Puri is the chairman of ANAROCK Property Consultants.
Three cited job growth as the upside risk, two cited effectively tackling the pandemic and one cited a rise in affordable homes.
On an affordability scale of 1 to 10, where 1 is very cheap and 10 is very expensive, analysts return an average of 4, rating Dubai Accommodation in the affordable bracket.
A clear majority of analysts, nine out of 11, said affordability would either remain the same or improve over the next two to three years.
Only two expected it to get worse.
One of the main reasons why Dubai’s housing market remains relatively cheap compared to other world markets is that there is an ample supply of homes to live in.
Knight Frank’s Durrani said, “Next year, we are currently tracking about 64,000 units due for completion. And if this figure materialises, it will be the highest level of completion since the 2009 GFC (global financial crisis). Will happen.”
“Clearly … over-supply has been an issue in the past and it remains a risk.”