Dubai property prices are forecast to close in on peak values seen in 2014 as demand continues from local and international buyers, according to new research.
Real estate consultants Cushman & Wakefield Core said sales transactions, in both the secondary and off-plan markets, are expected to see a steady uptick in 2022.
Its latest report also said sales prices are likely to witness a gradual, yet, continued rise, particularly in prime villa and apartment districts, with most districts expected to near peak values seen eight years ago.
It added that the emirate’s rental market will balance out and start favouring landlords after being tenant-friendly for years. However, rental rises will not be uniform across the city.
According to Cushman & Wakefield Core, prime districts will continue outperforming the market. It expects most districts to recover, prime districts, due to limited availability and high demand, are expected to see sharper rises.
Cushman & Wakefield Core also noted that oversupply will continue to be a downside risk to the market, particularly in the sub-urban apartment districts.
According to Cushman & Wakefield Core’s latest Dubai Annual Report 2021-2022, Dubai saw a robust recovery across all performance metrics of rents, capital values and transaction volumes last year.
Prathyusha Gurrapu, head of research and advisory at Cushman & Wakefield Core, said: “With many demand drivers including forward-thinking and strategic government initiatives, the lowering of LTVs along with business resilience while efficiently managing the pandemic, have helped Dubai in reviving strong investment interest across sectors.
“This has created an upward pressure on capital values and rentals over 2021, particularly in the prime office and residential districts, with many witnessing the sharpest rises in the last ten years.”
The report said Dubai saw 37,000 residential units delivered in 2021. Only 16 percent (5,900 units) of these were villa deliveries while the rest were apartment units.
“We expect a higher number of handovers this year with nearly 36,000 units conservatively estimated for 2022. However, further revisions are expected on supply forecasts as developers continue to calibrate to everchanging market conditions,” Gurrapu added.
Transaction volumes were consistently high over 2021, with the highest-ever quarterly value of transactions recorded over Q4.
Gurrapu said: “Villa prices and rents saw sharp rises as supply in centrally located and well-established villa communities becomes limited. The city-wide villa sales price average saw a 22% year-on-year increase, although values are 16% lower than the 2014 peak, demonstrating that values are still competitively priced and potentially have further room for growth.
“Mirroring the soaring demand for villas across the city, the city-wide average villa rents were up by 21% year-on-year while average apartment rents saw a modest 3% increase.”