KHALEEJ TIMES, Tuesday, Aug 24, 2021 | Muharram 16, 1443
Dubai villa, apartment prices to rise modestly in coming years
Emirates:
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.
The economy has bounced back sharply from the pandemic in the city following a
successful vaccination drive, and that has spilled into the real estate market,
with a continued increase in sales, according to Dubai Land Department records.
Dubai's house prices were forecast to rise 3.0 per cent this year and 2.5 per
cent in 2022, compared with 1.1 per cent and 2.8 per cent expected three months
ago, according to a Reuters survey of 11 property analysts taken August 11-19.
That modest outlook stands in stark contrast with other world property markets
like Canada, Australia and New Zealand where already record-high house prices
were expected to rise in double digits this year, stretching the limits of
affordability.
"Prices overall are still about 36 per cent 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."
A regional powerhouse of trade and tourism, the United Arab Emirates economy is
expected to grow 4.2 per cent in 2022, according to a Reuters July poll. The UAE
central bank pegged it at 3.8 per cent.
Nine of 11 analysts said activity in Dubai's housing market would rise in the
coming year and two said it would stay the same. None expected it to decline.
Among analysts who answered an additional question, five of 11 said a sharp
upturn in the economy was the biggest upside risk to the housing market outlook
over the coming year.
"Immigration reforms, trade liberalisation 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.
Three chose job growth as upside risks, two cited effective handling of the
pandemic, and one said an increase in affordable homes.
On an affordability scale of 1 to 10 where 1 is extremely cheap and 10 is
extremely expensive, analysts returned a median of 4, rating Dubai housing in
the inexpensive bracket.
A clear majority of analysts, nine of 11, said affordability would either stay
the same or improve over the next two to three years. Only two expected it to
worsen.
One main reason Dubai's housing market remains relatively cheap compared with
other world markets is because there is an ample supply of homes to live in.
"Next year, we are currently tracking almost 64,000 units due to complete. And
if that figure materialises it would be the highest level of completions since
the 2009 GFC (global financial crisis)," said Knight Frank's Durrani.
"Clearly... oversupply has been an issue in the past and that does remain a
risk."