By Md Manzer Hussain

BENGALURU – Dubai is expected to see house prices increase more quickly than anticipated this year. However, there are plenty of buyers in Dubai, according to a Reuters poll.

    The Gulf region’s trade and tourism hub and host of World Expo, Dubai has experienced a boom in property deals. Dubai Land Department data has shown that November 2015 saw the largest annual real estate sales since 2014.

    A Reuters survey of 12 analysts taken Feb. 9-23 found expectations of continued strength, with Dubai housing prices forecast to rise at a faster pace than predicted three months ago.

The average house price was expected to rise 7.5% and 5.5% in 2019, respectively, as compared with 5.0% for each November survey.

    “While improvements in the overall economy, along with the continued arrival of new residents, look set to support modest rises in residential sales prices and rents, a strong supply pipeline will likely limit the extent of market-wide uplifts,” Chris Hobden at Chestertons MENA said.

    According to most analysts who answered an extra question, the Dubai property market will remain a buyer’s market for at least the next couple of years. This contrasts sharply with the fact that many residential markets worldwide are experiencing rapid price rises during times like the pandemic.

    “There is still a large (amount) of supply that is likely to be completed across Dubai in the next two to three years. This is likely to favour buyers going forward,” said Swapnil Pillai at Savills.

    An oversupply of homes saddled the real estate sector for several years and will keep Dubai affordable for a while yet. Analysts returned a median value of 5, on a affordability scale from 1-10, where 1 means very affordable and 10 mean extremely costly.

    “Given that Dubai continues to be a buyer’s market, developers will refrain from increasing prices substantially. According to Anuj Puri (chairman at ANAROCK Property Consultants), affordability could continue for several years.

    When asked what will happen to affordability over the next two-to-three years, there was a split between all 12 analysts. It would be better, according to six analysts, but six expect it will worsen. This indicates uncertainty in market direction.

    For now increasing demand, especially from foreign investors, high immigration, and a sharp upturn in the economy will be the most significant upside risks, according to respondents to an extra question.

    However, they also cited downside risks including higher interest rates, a depleting stock of affordable homes, and an economic slowdown because of political instability in the region and around the globe.

(For additional stories, see the Reuters Quarterly Housing Market Polls:

(Reporting, polling by Md. Manzer Hussain. Editing by Hari Kishan. Ross Finley. Barbara Lewis.