Foreign demand will keep Dubai property prices rising steadily.
According to a Reuters survey of economists, Dubai house prices are expected to climb gradually within the next two years, largely driven by overseas buyers, while higher interest rates and a dearth of affordable housing may dampen development.
With an economic recovery fueled by rising oil prices and a resurgence in commerce and tourism, the Dubai property market recovered from a protracted period of declines last year and has maintained upward momentum since then.
The most recent Reuters survey of 13 property market analysts, conducted between May 11 and 26, indicated a median increase of 7.5% in Dubai home prices in 2022, consistent with the last poll done two months ago.
The lessening of the epidemic, “combined with the successful holding of the World Expo, the reopening of traffic corridors…continues to sustain the market’s resurgence,” said Faisal Durrani, Knight Frank’s head of Middle East research.
According to data from the Dubai Land Department, the emirate’s real estate market enjoyed its strongest quarter in almost a decade, with first-quarter sales transactions reaching their highest level since 2010.
Conversely, price increases were predicted to drop to 4.5% and 3.0% in 2023 and 2024, respectively, restoring economic stability.
This contrasts with some other property markets that have reached stratospheric heights.
“We saw more recovery from the pandemic last year; this year appears to be decelerating to more sustained growth,” said Haider Tuaima, president and head of real estate analysis at ValuStrat.
When questioned about what will drive Dubai’s property market this year and next, 11 of 13 respondents cited foreign investor demand. Two people picked local demand.
Even if the competitive pressures are moderate, they will pose difficulties for first-time buyers because borrowing rates are likely to rise, reducing affordability.
The Dubai market, whose prices are still significantly below their historical average in mid-2014, faces multiple negative risks this year and next, including increasing interest rates, a dearth of affordable housing supply, and inflationary pressures.
All but one of the 12 analysts who responded to an extra question predicted that affordability for first-time buyers will decrease in the coming years.
A strong two-thirds majority also predicted that rentals in Dubai, which is home to a huge number of expats, will become more expensive in the next two years. “Those hoping to buy will be forced out of business and required to stay renting. Rents have and will keep going up, as will consumption, and the lack of affordable housing will influence an increase in the total cost of living “said Lynnette Sacchetto, Allsopp & Allsopp’s director of analytics and digital transformation.
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