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Dubai’s residential property market is likely to face some headwinds this year compared to past 12 months, but villa and apartment sales will remain strong in a post-pandemic world, according to the latest analysis by real estate consulting firm CBRE.
The market performed well in 2021, with average home prices and rents increasing by 9.3 percent and 8.3 percent, respectively. Last year’s price growth was also the highest since January 2015, while rents continued to be at historic highs, particularly for villas, all thanks to strong demand from both buyers and tenants.
“Looking ahead, in 2022, we expect transaction volumes to remain robust over the course of the year,” CBRE said.
“However, with payment plans offerings tightening and mortgage rates likely to edge up, we anticipate the market will face some headwinds in 2022, at least compared to 2021.”
Latest indicators
As of December 2021, apartments in Dubai cost around 1,072 dirhams ($292) per square foot and average villa prices stood at 1,228 per square foot. However, these rates are still 28 percent and 15 percent below the 2014 peak for flats and villas, respectively.
It was only in October 2021 when average rental rates posted an annual growth for the first time since June 2015. By December, rents inched up by 8.3 percent, with average apartment and villa rates rising by 6.3 percent and 21.7 percent, respectively.
However, new housing supply continued to enter the market, with 2021 recording a total of 37,403 units delivered, particularly in Jumeirah Village Circle, Business Bay and Damac Hills, which accounted for almost a third of the total stock.
This year, a total of 68,138 new units will be added to the housing supply.
In terms of sales, Dubai recorded 57,043 deals in 2021, up by 73.6 percent from the previous year and 51.6 percent from 2019. Transactions during the year were the highest since 2009.
The non-oil sector was doing well in the past 12 months, with Dubai’s PMI recording a reading of 55.3, the highest since June 2019. Dubai’s GDP is forecast to register a growth rate of 6.2 percent this year, slightly lower than Abu Dhabi’s 6.3 percent.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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