Real Estate Dubai real estate prices haven’t yet peaked, says S&P By Shane McGinley March 10, 2023 Emaar Properties Residential transactions in Dubai hit 90,881 in 2022 and prices rose by an average of 9.5% Supply may catch up with demand in 2024Oversupply prevented as developers halted projects during pandemicAfter luxury market focus, mid-market residential prices could rise Dubai’s fast-growing real estate market has not yet hit its peak and is unlikely to do so until at least next year, when supply will begin to catch up with demand, according to a senior industry analyst. The total volume of residential transactions in Dubai hit 90,881 in the full-year 2022, exceeding the historic record high of 81,182 in 2009, while prices rose by an average of 9.5 percent, according to real estate consultancy CBRE Middle East. “We haven’t reached the peak in terms of value,” Tatjana Lescova, associate director at S&P Global Ratings, said in a media roundtable on Thursday. Tenants hit Dubai’s suburbs as prime property rents soarOff-plan sales set to drive future of Emirates property marketDubai brokers compete to sell Palm Jebel Ali homes She said momentum had been strong in the real estate sector since 2021 and the rating agency had taken a series of positive rating actions to reflect this. Lescova put the positive forecast down to the fact Dubai’s GDP is set to grow by 3 percent this year, while the population is forecast to expand by around 3 to 4 percent. “The fact last year emerging currencies were depreciated, one could imagine that the demand from emerging markets would go down. We haven’t seen this,” she said. While she believed prices and rents had yet to hit peak levels, she predicted the growth would slow. “We are not talking yet about price declines… probably not this year yet,” she said. “In fact, Chinese buyers are not here yet, so, whenever they come back, they will bring additional [buyers].” Oversupply was a big theme of S&P Global’s real estate forecasts in previous years, but during the pandemic developers stopped launching new projects. Supply has yet to catch up with demand and many launches this year grabbed headlines by announcing units had sold out in just hours or days. A villa and Palm Beach Towers 3 residences by Nakheel. Pictures: Nakheel Media Centre “For now, we’re looking at a more balanced market. By the time we get to a point of delivery, which will be starting 2024-25, the market conditions may be completely different, and this is when we will feel the oversupply,” she said. “For now, I think this year and next year it will not feel [the oversupply] that much.” The buoyant market has been evident from recent commentary from Dubai developers. Damac Properties in December told AGBI that 2022 had been a record year, with sales up 100 percent. Ali Hussain Sajwani, managing director of operations and technology, predicted that the current Dubai real estate boom will continue for at least another 18-24 months, but he believed the focus would move away from the luxury sector. “Since the luxury market has been booming, everyone has been focusing on launching luxury products,” Sajwani said. “People have forgotten the mid-segment: we now expect to see the mid-segment really boom.” Similarly, Rizwan Sajan, founder and chairman of Danube Group, in January predicted that prices in the mid-market residential segment could rise by as much as 15 percent in 2023.