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“Remarkable Rebound” in Dubai’s residential property market: HSBC

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Demand for larger homes buoys Dubai’s residential property market, with the price rally expected to last several years.

Noting that the sales rebound in Dubai’s residential property market has been “remarkable,” HSBC said in a recent report that the demand for bigger homes would further boost the property sector in Dubai.

Dubai’s residential property market could expect to be reignited by “the globally synched post-pandemic migration to larger homes,” Khaleej Times cited from the report.

Demand for larger homes with more outside space had already increased during the lockdown last year. In July 2020, 493 villas and townhouses were sold in secondary sales, the highest ever number of transactions to have been recorded in one month for this unit type. Online search trends also increased significantly (by 58% for one portal) as compared to the same period in 2019.

The last two quarters have seen prices appreciate, following years of depreciation, Global Head of Real Estate Research Stephen Bramley-Jackson and analyst Alok Baid wrote in the HSBC report. Q2 2021 was likely to follow suit, they added.

Further, HSBC also altered its recommendations for Emaar Properties, the biggest property developer in the UAE, from buy to hold, Bloomberg reported. Developments at the company appropriately captured the trend of migrating to larger homes, the HSBC report said, with Emaar’s stock offering over 90% correlation to property prices, and with the company seeing growth of 3x in five-month sales.

DUBAI'S RESIDENTIAL PROPERTY MARKET TO SEE PRICE RALLY

The comments are in line with a recent report by Morgan Stanley, suggesting that improved demand, supply growth, and lead times could lead to a more optimistic future for Dubai’s property market, with the residential price rally lasting several years.

Government initiative and attractive mortgage rates have been pivotal in growing demand for residential properties in the emirate. Wealthy home buyers are looking to purchase affordable luxury properties in Dubai, which have dropped to more attractive rates. In March this year, a record 84 luxury homes were sold for over USD 2.7 million, and prices for high-end villas also stabilised.

Overall, the residential property market is expected to remain affordable, with oversupply of units and a global pandemic-induced slowdown. An earlier report by JLL noted that Dubai could expect an increase of 9% in the total residential units already in the market.

Dubai’s residential property market can expect to be mostly tenant-led in the short term, with occupiers and landlords striking deals over rental reductions, rent-to-own schemes, and fee waivers.

 

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