The on-going rebound in Dubai’s property sector that is largely driven by a wave of government reforms and strong demand for larger homes will last several years, analysts from two leading international banks said.

HSBC bank analysts expect the rally in Dubai’s real estate sector, which recorded a total sales transaction value of Dh10.97 billion in April 2021 — the highest since March 2017 — to last several years.

“The reported sales rebound in Dubai year-to-date has been remarkable,” HSBC’s Stephen Bramley-Jackson and Alok Baid wrote in a report. HSBC’s upbeat outlook aligns with that of Morgan Stanley analysts who forecast that robust demand, peaking supply growth and long lead times for new projects could lead to “a tighter-than-expected market over the next several years.”

“The rally in Dubai’s residential property prices isn’t stopping anytime soon,” they said. Demand for property picked up amid “a wave of government reforms over the past 12 months, attractive mortgage rates, and a shift in demand patterns due to Covid-19,” according to Morgan Stanley.

Property market analysts believe that as the government rolls out incentives for investors on the back of a host of region-first economic reforms, Dubai’s housing market, which has been buoyant since H2 2020, would continue to thrive.

According to Dubai Statistics Center data, Dubai’s economy is projected to grow 4.0 per cent this year after an estimated 6.2 per cent contraction in 2020. As a key contributor, the realty sector accounts for about 8.0 per cent of Dubai economic output.

“The dynamics in the residential real estate market in 2021 has been interesting thus far. In April alone, we have seen six villa transactions over Dh50 million, with one on the Palm recorded as the second highest villa transaction in 2021 worth Dh 105 million. When looking at the mortgage transaction data, we have seen that April, March, and January of 2021 had the highest number of monthly transactions since March 2010,” said Lynnette Abad Sacchetto, director of research & data at Property Finder.

A dramatic recovery in Dubai realty was noticeable from March when transactions during March were at a 10-year high as strong market growth continued, a recent report by Property Monitor said. “With a fifth continuous month of gains, Dubai’s price recovery is well underway though not uniformly spread across communities. Villa and townhouse communities have particularly emerged as hot spots with a further acceleration in prices expected over the coming months.”

However, the positive outlook contrasts with certain negative views from international property consultancy Knight Frank and a few others.

Knight Frank analysts said a supply glut that has depressed Dubai’s property prices for over half a decade would persist and likely keep it on the sidelines of a global upswing in values of prime residential real estate.

Fast emerging from the pandemic slump, the construction industry will deliver an estimated 62,000 homes in the emirate this year and nearly 63,500 in 2022, which would be the most since 2009, Knight Frank estimates.

According to realty pundits, luxury villas are the hottest segment in the market, with European buyers in particular seeking homes on Dubai’s signature Palm Jumeirah man-made island, as well as golf course estates.

A recent property market report from Allsopp & Allsopp noted that the first quarter of 2021 has been incredible for the Dubai real estate market with an 82 per cent increase in sales transactions. Real estate consultancy Core estimates that an additional 26,500 units are expected to be handed over in the remainder of the year, taking the total annual forecast for 2021 at over 37,000 units.