Experts say, an acceleration in Dubai housing market activity this year is more likely than a slowdown.
Dubai property prices are expected to rise for the first time in six years this year due to a swift vaccine rollout that has lifted hopes for an overall economic recovery, according to a poll of real estate analysts carried out by Reuters.
Dubai's state real estate sector has been subdued for years because of chronic oversupply coupled with low economic growth. Last year the situation was exacerbated by the crisis caused by the coronavirus pandemic.
However, on Monday the second-wealthiest emirate in the country eased COVID-19 restrictions, which allowed hotels to operate at full capacity again, raising hopes for a region heavily dependent on tourism.
Responding to an additional question, seven of 10 real estate analysts said an acceleration in Dubai housing market activity this year was more likely. The remaining three, on the contrary, forecast a slowdown.
'We can already see improved investor confidence and a boost in demand as prices have been on the lower side for the last few years and supply has been significantly curtailed,' said Anuj Puri of ANAROCK Property Consultants. 'The vaccination drive here also has been going well, and the economy has been gradually recovering amid government measures to spur growth.'
The May 11-19 Reuters poll of 10 analysts forecasts that house prices in Dubai will rise 1.1 percent this year and 2.8 percent next. New forecasts mark a complete U-turn in expectations from a January survey when prices were predicted to decline 2.0 percent in two following years.
Prime Dubai properties have been extremely popular among buyers as they take advantage of low prices, easy credit and an economy open for business despite the COVID-19 pandemic.
Still, eight of 10 analysts pointed out that a sharp turn in the economy or an increase in demand could be the biggest upside risks to housing market activity this year.
According to Dubai Statistics Centre data, the emirate's economy was projected to grow 4.0% this year after an estimated 6.2% contraction last year.
Data from Dubai Land Department showed that there had been an uptick in the emirate's real estate sector recently. The sector's contribution to economic output is about 8 percent.
'The real estate market has been very buoyant since H2 2020 and continues to flourish. As more government incentives come into fruition to stimulate the economy, this will have an effect on the housing market,' said Lynnette Abad Sacchetto, director of Research & Data at Property Finder.
When asked what was the biggest downside risk to housing market activity this year, five of 10 analysts said an economic slowdown. The others said lack of demand or a lack of affordable homes.
'The only potential risk I see at the current period is that COVID-19 lingers longer than expected and further affects economic growth and tourism to the emirates,' said Simon Baker of Haus & Haus.