Dubai and Buenos Aires are the only two cities where Knight Frank selects 25 locations to monitor the decline in prices for their homes.
A group that has been keeping retail prices in Dubai for more than a decade could set itself apart from rising global prices.
With the onset of the epidemic, construction projects will provide about 62,000 homes in the emirate this year and about 63,500 by 2022, which will be the best since 2009, according to Knight Frank LLP.
The availability of this item is likely to come from Dubai, alongside Buenos Aires, as the only two cities in Knight Frank to choose the 25 best locations to witness the fall in home prices.
“The inconsistency in the value of what has been happening has been evident in Dubai’s residential market since the high reliance on 2008-09,” said Faisal Durrani, head of Middle East Research at Knight Frank. “Looking at the next few years, it looks like it will continue.”
While the richest homeowners who fled the virus in Dubai have also helped increase the demand for luxury homes earlier this year, the change has not been the same. Many of the city’s residences are still functioning at a rate that has dropped by more than half since 2014.
The epidemic also exacerbated the problem of unemployment and the departure of foreign workers, which led to people borrowing money. Increasing pipelines indicate that overcrowding remains a major threat in Dubai, one of the seven sheikdoms that make up the United Arab Emirates.
However, the idea also means that Dubai will be more affordable for consumers with deep pockets. A million dollars could buy 1,676 square meters in Dubai, about five times more than in London or New York, according to Knight Frank. Dubai has 42,356 homes worth $ 1 million, second only to the UK capital.
Prices for luxury homes, 3.6 million dirhams ($ 1 million) or more, are expected to fall 2% in 2021 after dropping 6% in 2020, Knight Frank estimates.
Housing prices have fallen by 2% to 3% while single-family homes – known locally as dormitories and make up about one-third of the city’s dormitories – should rise by 3% to 4%, says Durrani.
Although the final delay is over, “it looks like the market is being offered more housing than it could afford,” he added.
However, Knight Frank predicts that prices will fall sharply due to reduced travel restrictions and plans to launch Expo 2020 which is delayed by the end of this year.
With “economic transformation, business confidence is rising and the stock market is moving higher as more interest rates and more contracts,” Durrani said.
(Updates and delayed comments found in paragraph 10)
-I am assisted by Abeer Abu Omar.