Two facts present themselves. On the one hand, Dubai’s residential real estate has been in a bear market for several years. Yet, on the other hand, transaction volumes in 2021 have picked up and segments of the housing market are performing strongly. Dubai Land Department’s quarterly index showed, for instance, that the price of villas and townhouses increased by almost 5% in the six months ending March 31^st 2021.

The obvious next question is whether the bear market is over for good and, related to this, whether prices will start to increase across all market segments. While there has been a lot of talk about frenetic activity at the high-end of the residential sector, Dubai Land Department is still reporting price declines in the broader apartment market.

The market fundamentals remain difficult to read. After all, even as the economy rebounds from COVID-19, overall output remains below pre-pandemic levels. Furthermore, across the UAE, real estate markets are still dealing with population outflows following the pandemic-induced economic shock to the country’s service-oriented sectors (such as hospitality). While, from a UAE perspective, general government finances are looking sound again with the oil price hovering around USD 70 a barrel, it would be unwise to expect the government to open the fiscal taps. Abu Dhabi, the main source of budget spending in the UAE, has clearly shown its commitment to long-term fiscal sustainability.

We cannot therefore assume that housing market fundamentals are unambiguously positive; all we can say is that things are getting better and stabilising, rather than necessarily ‘powering ahead’. But real estate is as much about sentiment as about fundamentals; especially in a residential market like Dubai’s which attracts high levels of foreign capital, and where a relatively small shift in local preferences from renting to buying can have an outsized market impact.

This is where Peninsula Real Estate’s home sentiment survey, conducted in partnership with Cityscape Intelligence, can provide a great deal of valuable information. It is an opportunity to obtain a clear view of what homeowners and renters think will happen to the market in the future.

Our previous Q4 2020 survey surprised many by showing a dramatic improvement in homeowner sentiment. Only 27% of homeowner respondents reported expecting prices to continue to decline during 2021; while 30% expected price stability, and 43%, the largest group, expected prices to increase. To put this turnaround in perspective, at the end of Q3 2020, 50% of respondents expected prices to decline in the following 12 months.

Our last survey provided an excellent early look at how homeowners were viewing the market in 2021. By clicking here and filling in our latest survey, you will help us all gain a better understanding of whether the turnaround will gather strength or run out of steam.