The market is likely to remain a buyer’s market for a few more years as strong demand propels prices to higher levels than previously anticipated, a Reuters survey found.
Dubai, home to the World Expo and a major trade and tourism center in the Gulf region, has experienced a boom in real estate deals. The sale values of real estate until November last year were the highest since 2014, Dubai Land Department data shows.
According to a Reuters survey of 12 analysts taken Feb. 9-23, Dubai housing prices are expected to rise at a faster rate than anticipated three months ago.
Compared to the November survey, it found home prices are expected to rise 7.5% this year and 5.5% next year.
“While improvements in the overall economy, along with the continued arrival of new residents, look set to support modest rises in residential sales prices and rents, a strong supply pipeline will likely limit the extent of market-wide uplifts,” Chris Hobden at Chestertons MENA said.
In response to an additional question, most analysts predicted that Dubai will remain a buyer’s market at least for the next couple of years. Contrary to this, most residential markets around the world experienced runaway price increases during the pandemic.
“There is still a large (amount) of supply that is likely to be completed across Dubai in the next two to three years. This is likely to favor buyers going forward,” said Swapnil Pillai at Savills.
Oversupply has burdened the real estate sector for several years and will keep Dubai affordable for some time.
With an affordability scale of 1 to 10 where 1 is extremely cheap and 10 is extremely expensive, analysts returned a median of 5.
“Given that Dubai continues to be a buyer’s market, developers will refrain from increasing prices substantially.
Therefore, affordability may continue for some years,” said Anuj Puri, chairman at ANAROCK Property Consultants.
In response to the question of what will happen to affordability in the next two to three years, all 12 analysts disagreed.
According to six respondents, it will improve, but six expect it to worsen, suggesting uncertainty surrounding the market’s direction.
According to a response to an extra question, the most significant upside risks will be increased demand, especially from foreign investors, high immigration, and an economic turnaround.