Standard & Poor’s, the credit rating agency, said that real estate prices in Dubai have clearly rebounded from the record low level they reached at the end of 2020, but demand is unstable, in addition to the abundance of residential real estate supply that will put pressure on prices in the long run, making the recovery fragile, according to Reuters.
“The recovery in residential demand has benefited the luxury real estate development sector a lot with increased sales and improved prices,” Standard & Poor’s said.
Residential apartments make up between 85% and 90% of real estate in Dubai
She added that market data shows that apartments, which constitute between 85% and 90% of real estate, witnessed an increase in prices by about 6% in the second quarter, and villa prices increased, while apartment rents are still slowing.
CBRE Group, a real estate investment company, had said that average residential property prices in Dubai rose 4.4% in the 12 months to August, the highest annual increase since February 2015, but the continuing decline in rents indicates the continuing weakness of a sector facing troubles for a while.
Standard & Poor’s said that real estate prices are at a low point in the movement cycle and expected a recovery in 2021-2022 supported by increased demand with improved consumer sentiment, increased oil and gas prices, high vaccination rates in Dubai and the city’s hosting of the World Expo, which was delayed a year due to the pandemic.