The supply-demand imbalance has been a defining feature of the emirate’s residential market.
Dubai’s property prices held down for over half a decade by a supply glut will likely stay on the sidelines of a global upswing in values of prime residential real estate, Bloomberg reported, citing Knight Frank research.
The emirate's construction industry is fast emerging from the pandemic slump. An estimated 62,000 homes will be delivered in Dubai this year and nearly 63,500 in 2022, which would be the most since 2009, according to consultancy firm Knight Frank.
The burst of supply will probably leave Dubai, alongside Buenos Aires, as the only two cities in Knight Frank’s selection of 25 prime locations to witness a decline in values for their top-end residential properties.
'The supply-demand imbalance has been a defining feature of Dubai’s residential market ever since the Great Recession of 2008-2009,” said Faisal Durrani, head of Middle East Research at Knight Frank. “Looking at the next few years, this looks set to persist.'
The COVID-19 pandemic compounded the pressures from job losses and foreign workers departures, chipping away at demand for rentals.
However, Knight Frank forecasts that prices will decline at a slower pace thanks to easing travel restrictions and plans to hold the postponed Expo 2020 later this year.
'With an improved economic outlook, business confidence is rising and that is filtering through to the property market in the form of heightened interest and rising deal volumes,' Durrani said.