A basic view of residential skyscrapers and a seashore in Dubai, United Arab Emirates March 11, 2021. REUTERS/Abdel Hadi Ramahi/File Picture

DUBAI, Oct 12 (Reuters) – Dubai actual property costs have rebounded strongly from a file low on the finish of 2020, however demand is uneven and oversupply of residential properties will strain costs in the long term, making the restoration fragile, S&P World Scores mentioned.

Actual property funding agency CBRE Group mentioned final week that common residential property costs in Dubai rose 4.4% within the 12 months to August, the best annual progress since February 2015, however an ongoing fall in condo rents signalled continued weak spot within the long-troubled sector.

“The rebound in demand for residential actual property has largely benefited premium builders with a surge in pre-sales and worth enhancements,” S&P mentioned.

It mentioned market knowledge confirmed that flats, which make up 85-90% of properties, skilled a worth improve of about 6% within the second quarter. The charges for villas have additionally accelerated whereas rents for flats are nonetheless lagging.

Reuters reported in March that the posh phase of Dubai’s property market had obtained a lift since final yr’s sharp downturn, however actual property’s total restoration remains to be a great distance off.

Even earlier than the coronavirus pandemic, the long-term financial development within the United Arab Emirates had been sluggish for the reason that 2014-15 oil worth crash. Provide has outpaced demand for brand spanking new homes and flats for years in a market the place many of the inhabitants are foreigners, a lot of whom left through the pandemic.

Actual property costs are at a low level within the cycle, S&P mentioned, anticipating a rebound in 2021-2022 supported by demand pushed by improved shopper sentiment, elevated oil and fuel costs, excessive vaccination charges in Dubai, and the town’s internet hosting of the World Expo, delayed by a yr because of the pandemic.

“Within the longer run, we imagine that the demand for residential properties will rely … on the success of the latest authorities initiatives concentrating on inhabitants improve, resembling new visas and extra liberal social legal guidelines,” S&P mentioned.

Reporting by Yousef Saba, enhancing by Ed Osmond

Our Requirements: The Thomson Reuters Belief Rules.