The study released on Monday revealed that Dubai recorded apartment and villa sales of Dh61.9 billion between January and May 2022, which shows that the real estate market has performed well even as global economies struggle with inflation amid tightening markets.
According to a senior official at Knight Frank, residential property in the emirate will continue to be an excellent inflation hedge, with home price rises likely to stay at 5-7 percent in mainstream areas and 12-15 percent in premium markets.
“There are several reasons to be cautiously optimistic about reducing inflation in the UAE. The government’s incredibly diverse import policy, recent initiatives to improve food security, and the strength of the US currency, which is reducing imported inflation, are all big positives,” said Faisal Durrani, Partner – Head of Middle East Research.
One of the best-performing policies is the government’s proactive initiative to freeze the prices of 11,000 essential foods, including milk, bread, pork, and poultry. Moreover, he said that the rise in crude oil prices bolsters the policy, which will ensure a solid rebound in economic development.
Using Oxford Economics data, Knight Frank forecasts a comeback in Abu Dhabi’s GDP growth this year from roughly 0.5 percent to somewhat more than 6 percent. Dubai’s GDP will probably grow at the same rate as last year, aided by a broader return of global travel and the emirate’s attractiveness as a worldwide holiday destination.
The UAE’s all-important non-oil sector’s latest PMI score remained stable at a 12-month high in April as orders continued to rise, showing that the economy’s relative confidence is trickling through to business activity levels.
“According to the April PMI numbers, companies are concerned about growing cost pressures. A slowdown in the rate of new employees and passing on expenses to customers are two quick pressure release valves. The latter often serves as the last option, and we haven’t seen that yet,” Durrani added.
The home market is still reasonably safe.
“The UAE’s fiscal policy coincides with the US. The recent 50 basis point rise in interest rates to 2.25 percent does entail greater outgoings for mortgaged families moving forward. It is, nonetheless, comparable to other worldwide key marketplaces,” said Ashley Bayliss, Partner – Head of Mortgage and Debt Advisory at Knight Frank.
According to Knight Frank, mortgaged purchasers for villas and flats account for barely 18% of Dubai’s residential market value. Close to 40% of transactions received financing last year, while the figure was just over 50% in 2007.
As of the end of May, nearly Dh38 billion of financing for real estate assets took place across all real estate asset classes, despite the decrease in residential mortgage lending. According to the number of mortgage deals we have seen this year, 2022 could be on course to see the second-highest level in five years. Bayliss explained that banks face the biggest challenge of keeping up with the market’s current growth.
Source: Property News
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