Dubai's real estate market is improving due to higher-than-expected demand

Demand for residential real estate has picked up faster than expected, Morgan Stanley states.

According to Morgan Stanley's latest research, Dubai real estate prices are rising for the first time in six years amid higher demand and a slowdown of project launches since 2017.

Citing consulting firm ValuStrat's report, it said there was a 1.2% month on month rise in residential values in April, which is the highest monthly index growth rate in seven years.

'Demand for residential real estate has picked up faster than expected, amidst a wave of government reforms over the past 12 months, attractive mortgage rates, and a shift in demand patterns due to COVID-19,' Morgan Stanley's research said. 

It upgraded Dubai-listed Emaar Development to 'overweight' and raised its price target by 37% to USD 10.

Some developers see recovery taking longer.

'The market is slowly recovering from the effects of the COVID-19 pandemic and its impact on various industries, particularly travel and tourism. I still strongly believe that recovery will take at least 12-24 months,' Dubai's DAMAC Properties Chairman Hussain Sajwani pointed out in a bourse filing.

On Sunday DAMAC reported a widening first-quarter loss of USD 51 million versus a loss of USD 28 million a year ago.

Meanwhile, Union Properties, another Dubai developer, reported profit of USD 1.5 million for the quarter ending March 31 versus a loss of USD 33 million a year ago.