Dubai's property market will continue to recover in 2022, according to consultants ValuStrat. The continued recovery will be aided by economic reforms and an expedited vaccination program. Prices and rents for villas in highly desired prime locations could exceed 2014 peak levels.
"Market sentiment is expected to improve further as the economy improves, with the successful vaccination program and the gradual opening of international borders," it said.
It went on to say that capital values and rents for villas in highly desirable prime locations are expected to reach, if not exceed, 2014 peak levels.
One of the downside risks, according to ValuStrat, is that the government will reintroduce movement restrictions as a result of the spread of the Omicron variant of the COVID-19 virus.
Apartment prices and rents should stabilize by the second half of 2022, according to the report, due to an expected oversupply of apartment units in the coming years, particularly along the E311 and E611 highway corridors.
"While increases in loan-to-value ratios help property investment, the impact of likely rising interest rates will be felt in the short and medium term," according to ValuStrat's 2022 outlook.
It stated that additional demand from international investors, as well as domestic investors currently residing in the northern emirates, is expected as travel restrictions are relaxed.
The 2022 forecast comes after more capital gains in the fourth quarter of 2011, albeit at a slower pace than earlier in the year.
Villa capital gains have slowed to sustainable levels, according to the ValuStrat Price Index, while apartment price growth has remained in the single digits.
Year on year, the citywide valuation-based residential price index increased by 15%. The Dubai VPI for residential rental values rose by 6.7 percent quarter on quarter and 18.9 percent year on year to 67.3 points, the highest quarterly increase since 2014.
Source: Arabian Business