37,000 residential units, including 5,900 villas, were delivered in 2021
This year, Dubai real estate is expected to sustain an upward trend despite Covid-19 variants causing uncertainty in the market as strategic government initiatives, visa reforms, resilient economy, and successful pandemic strategy will continue to attract global investors, experts say.
The latest data indicates that lowering of loan-to-value ratios and business resilience have helped Dubai revive strong investment interest in the property sector that saw robust recovery across all performance metrics of rents, capital values, and transaction volumes last year.
"The UAE government's continued focus on making the country the most preferred place for tourists, businesses, and residents due to its pioneering policies, economic and visa reforms, agile and safe management of the pandemic without impacting business continuity is expected to continue underpinning the real estate market and bolster demand across asset classes," according to Core's latest Dubai annual report for 2021-22.
"Strong sales and rental price recovery is underway in Dubai real estate market, but most districts are still below 2014 peak values, signalling potential room for growth this year," it said.
The report highlights that 37,000 residential units, including 5,900 villas, were delivered in 2021, and almost similar residential units will come online this year.
"With the phasing of many projects due to the pandemic over the last two years, 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 ever-changing market conditions," the report said.
Villa supply shrinks
Romaa'l Patel Co-Founder of The Property , said villa prices and rents saw sharp rises as supply is centrally located and well-established villa communities become limited.
She said the city-wide villa sales price average saw a 22 per cent year-on-year increase, although values are 16 per cent 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 per cent year-on-year while average apartment rents saw a modest three per cent increase."
"With Covid-19 variants causing many schools and offices to go back and forth with operating protocols, the preference for private, open and additional spaces will remain in the Covid era, further underpinning the preference for villas and larger units," she added.
Market recovery continues
Another property consultancy ValuStrat noted that most of the apartments delivered last year were in Dubailand (26 per cent), Jumeirah Village Circle (17 per cent) and Business Bay (12 per cent) while more than 82 per cent of villas finishing construction were in Dubailand specifically in Akoya Oxygen, Serena, Town Square and Villanova.
Tom Fawcett, Co-Founder of The Property said the delivery of 37,000 units, despite the corona pandemic, shows the market is cruising towards recovery.
"With around 36,000 more units expected to be delivered in 2022, it can be forecasted that the gap between supply and demand will be narrowed since lesser new projects were launched."
2022 residential market forecast
Transaction volumes to see a steady increase - Sales transactions, in both the secondary and off-plan market, are expected to a steady uptick in 2022 as demand continues from local and international buyers.
Sales prices to witness a gradual, yet, continued rise, particularly in prime villa and apartment districts, with most districts expected to near 2014 peak values.
Rental market to balance out and start favouring landlords after being tenant friendly for years, however, rental rises will not be uniform across the city.
Prime districts to continue outperforming the market – While we expect most districts to recover, prime districts due to limited availability and high demand, are expected to see sharper rises.
Oversupply, a continued downside risk - With a high number of handovers expected in 2022, oversupply will continue to be a downside-risk, particularly in the sub-urban apartment districts.