Outlook: Dubai property market set to face headwinds in 2022 – CBRE

Dubai’s residential property market is set to face headwinds this year compared to the past 12 months, but sales of villas and apartments will remain strong in a post-pandemic world, according to the latest analysis from real estate consultancy CBRE .

The market has done well in 2021, with average home prices and rents rising 9.3% and 8.3%, respectively. Last year’s price growth was also the highest since January 2015, while rents remained at historic levels, particularly for villas, all thanks to strong demand from buyers and tenants.

“Looking forward, in 2022, we expect trading volumes to remain robust through the year,” CBRE said.

“However, with payment plan offerings tightening and mortgage rates likely to rise slightly, we expect the market to 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 were 1,228 per square foot. However, these rates are still 28% and 15% lower than the 2014 peak for apartments and villas, respectively.

Only in October 2021 did average rental rates show annual growth for the first time since June 2015. In December, rents increased by 8.3%, with average rates for apartments and villas increasing 6.3% and 21.7% respectively.

However, new housing supply continued to enter the market, with 2021 seeing a total of 37,403 units delivered, including 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 transactions in 2021, up 73.6% from the previous year and 51.6% from 2019. Transactions during the year were the highest since 2009.

The non-oil sector has performed well over the past 12 months, with Dubai’s PMI registering a reading of 55.3, the highest since June 2019. Dubai’s GDP is expected to register a growth rate of 6, 2% this year, slightly lower than Abu Dhabi’s 6.3. percent.

(Reporting by Cleofe Maceda; editing by Seban Scaria)

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