Economists are once again beginning to show signs of confidence in Dubai’s housing market, following an extensive slump which appears to at long last have bottomed out. As the city readies itself for the 2020 World’s Fair and oil prices climb slowly back to strength, a new report suggests that a mid-2017 housing market rebound could be on the cards.
Over the past few years, average property values across the luxury home sector plummeted dramatically, though data collected in 2016 suggested that things had become just about as bad as they were going to get. Released Thursday, Knight Frank’s United Arab Emirates outlook indicated that luxury home prices decreased by a lower 4% in 2016 compared to the 5% slump in 2015, while at the same time suggesting that prices had remained unchanged from August to the year’s end.
“This leads us to believe the residential market is reaching its cyclical trough,” Knight Frank’s analysts wrote in the report, suggesting that 2017 will bring about much-needed recovery for the housing market in Dubai.
“We expect the residential property market in Dubai to gradually recover in 2017 with a potential uptick in sale prices and rents from mid-2017 onwards,” the report said.
It is widely expected that heavy investment in infrastructure will fuel increases in house prices over the next three years, alongside the expansion of various international corporations that have moved into Dubai and established the emirate as their primary or regional hub. An increase in oil prices this year could also see additional cash being pumped into road, airport and metro expansion, further bolstering economic growth in general.
One of the primary causes of plummeted property prices in Dubai has been excessive supply that has outstripped demand. In response, a number of projects announced for commencement over the coming years have been cancelled by their respective developers – more than 160 having been phased out as of October last year. This should to some extent help restore some degree of synergy between supply and demand – particularly at the higher end of the property market.