Dubai real estate prices have rebounded strongly from a record low at the end of 2020, but demand is uneven, and oversupply of residential properties will pressure prices overall, making the recovery fragile. The highest annual growth since February 2015, but an ongoing fall in apartment rents signalled continued weakness in the long-troubled sector. Market data showed that apartments, which make up 85-90% of properties, experienced a price increase of about 6% in the second quarter. The rates for villas have also accelerated while rents for apartments are still lagging.
Even before the coronavirus pandemic, the long-term economic trend in the United Arab Emirates had been sluggish since the 2014-15 oil price crash. Supply has outpaced demand for new houses and apartments for years in a market where most of the population are foreigners, many of whom left during the pandemic. Real estate prices are at a low point in the cycle, S&P said, expecting a rebound in 2021-2022 supported by demand driven by improved consumer sentiment, increased oil and gas prices, high vaccination rates in Dubai, and the city’s hosting of the World Expo, delayed by a year due to the pandemic.