As the end of the year draws closer, it’s natural for professionals from all sectors to reflect on what the last 12 months have brought and what the next 12 months are likely to bring.
Even as far back as 2020, when Covid-19 was spreading rapidly and the world began to lock down, it seemed somewhat inevitable that both public and private-sector organisations would need to overcome significant challenges in the immediate post-pandemic climate. And so it was that 2021 became a year characterised by rebuilding and recovery for the global economy.
Those of us working in the real estate sector have certainly been more fortunate than most, all things considered.
Compared with many sectors, real estate has so far remained resilient throughout the post-Covid period and has even outperformed expectations across a range of key international markets.
Across the globe, property continues to provide stability in an otherwise turbulent economic landscape.
Dubai: exceeding expectations
Dubai’s property sector has rebounded especially strongly. Like many others in our industry, I have been pleasantly surprised by the levels of performance we have seen within the local market since the pandemic hit.
For example, recent months have seen average home prices in the emirate rise at their fastest pace since 2015, with August transaction volumes surging nearly 77% year-on-year – and increasing by 56% compared to the same period in 2019, according to figures released by CBRE Group.
It’s against this backdrop that I expect Dubai’s property sector to maintain its momentum as we head into the new year.
It seems likely that the emirate’s property sector will perform equally well in 2022. Factors such as the recovery of the UAE’s population levels in the wake of 2020 departures, and the continued resurgence of consumer confidence, and mega-events such as Expo 2020 Dubai, would no doubt contribute to the current tailwind.
The fact that the UAE’s real estate sector is recovering faster than many other global markets is largely due to our government’s response to Covid-19.
Unlike some countries, our leadership has succeeded in minimising infection rates without implementing onerous restrictions and multiple lockdowns, making the Emirates extremely popular among individuals looking to relocate overseas.
As such, oversupply may not represent the challenge many of us feared it might become during the height of the pandemic.
The United Kingdom: a tempting prospect for GCC investors
Real estate has also offered some much-needed stability to the UK’s economy during the course of 2021, and Middle East investors have been quick to take advantage of this fact.
While Zoopla’s latest house price index predicts that UK property price increases will slow somewhat in 2022, growth of 3% and above is still anticipated across all regions of the country, meaning it will most likely continue to draw the eye of GCC property investors throughout the coming year.
The United States: slowing but still steady
As I said in a previous blog, analysts paint a similar picture in the US, where the real estate sector also exceeded expectations during the period August 2020-2021.
While experts anticipate 2022 will witness a slowdown in house-price upticks as new inventory comes online, growth in the US property market is nevertheless expected to continue at 1.9% over the coming 12 months.
China: a less optimistic outlook
China is perhaps one major global market in which property trends look less buoyant. Declines in real estate sales, new construction projects, and related activities such as cement and steel production, were reported in September 2021.
China’s new home prices fell by an average of 0.2% from September to October 2021, the first decline since March 2015 according to Reuters’ analysis of statistics released by the country’s National Bureau of Statistics (NBS).
The report also noted that new construction starts witnessed a year-on-year decline of more than 33% in October, while overall investment from the nation’s real estate developers fell by more than 5%.
While Reuters notes that regulators’ efforts to stabilise the sector could cause supply and demand to return to typical levels by the end of 2021 or early 2022, this combination of challenges may still spell a period of stymied growth for China’s real estate market as we head into the new year.
Positive global trends
Overall, I think it’s reasonable for real estate professionals to remain optimistic about market performance in 2022.
As other industries such as travel, tourism and hospitality continue with their more gradual recoveries from Covid-19, property looks set to offer a persistent point of stability for investors throughout the coming year and beyond – which is certainly welcome news for our sector.