According to a Reuters poll of housing analysts, Dubai’s residential property market is on a steady course and prices will rise modestly over the next couple of years.
As a result of a successful vaccination drive, the economy rebounded sharply after the pandemic in the city-state, and that spilled over into the real estate market. Sales increased, according to Dubai Land Department records.
One Reuters survey of 11 property analysts took place Aug. 11-19 and found that Dubai house prices are expected to rise 3.0% this year and 2.5% in 2022, compared with 1.1% and 2.8% forecast three months ago.
In contrast, other world property markets like Canada, Australia, and New Zealand are expected to see record-high prices rise by double digits during this year, pushing home affordability to its limit.
“Prices overall are still about 36% down from their last peak in 2014, so relatively speaking we are still a long way off from the previous peak,” said Faisal Durrani, head of Middle East research at Knight Frank.
“And the increases recently are definitely suggesting the market has started to bottom out in certain pockets. At the top end of the market, we are probably seeing a quicker recovery than elsewhere. For some, like apartments, we are not expecting price rises as quick and as fast as has been the case for villas.”
The United Arab Emirates economy, which consists of seven emirates, including Dubai, is expected to grow 4.2% in 2022, according to a Reuters July poll. The UAE central bank pegged it at 3.8%.
Nine of 11 analysts predicted Dubai’s housing market would rise in the coming year, and two predicted it would remain the same. It was not expected to decline.
Among the 11 analysts who answered the additional question, five said a sharp upturn in the economy was the biggest upside risk to the housing market outlook over the next year.
“Immigration reforms, trade liberalization, and (the) 2040 masterplan are all giving a major fillip to Dubai’s economy. The Dubai Expo will also boost economic activity. This inevitably helps in attracting more FDI and indirectly benefits the overall real estate market,” said Anuj Puri, chairman at ANAROCK Property Consultants.
One said a rise in affordable homes was an upside risk, two said effective handling of the pandemic and three chose job growth as an upside risk.
According to analysts, Dubai housing scores a median of 4 on an affordability scale in which 1 is extremely cheap and 10 is extremely expensive.
Nine of 11 analysts forecast that affordability will either remain the same or improve over the next two to three years. Only two expected it to get worse.
There is an abundance of housing in Dubai, which is one of the major reasons why Dubai’s housing market remains relatively cheap.
“Next year, we are currently tracking almost 64,000 units due to complete. And if that figure materializes it would be the highest level of completions since the 2009 GFC (global financial crisis),” said Knight Frank’s Durrani.