Dubai housing market lures rich Asians, prices soar.

Dubai's swinging housing market is attracting wealthy Asians with a "clear supply-demand imbalance" that will drive prices up further.

Where exactly to buyreal estate: Japan, Canada or Dubai?

Hong Kong-based marketing officer Simon Cheng weighed his options carefully. He was concerned about taxes, location and the local economy in Japan. Between Canada and Dubai, he found the financial center of the United Arab Emirates more attractive.

"Rental yields in Hong Kong are about 2 percent, while I expect 6 or 7 percent in Dubai," he says. "It's the best long-term investment. I'm not worried if I can't rent out my property in Dubai. People''there rich'.

According to real estate consultancy Knight Frank

Dubai is one of the most affordable luxury residential real estate markets in the world. For $1 million, you can buy a 226-square-foot (about 21 square meters) apartment in Hong Kong or a 1,130-square-foot (about 105 square meters) house in Dubai.

The question, however, is how long Dubai will be able to maintain its position as the city's housing market gains momentum. According to Knight Frank, home prices in Dubai rose 5.6 percent in the first quarter, climbing for the ninth consecutive quarter. The price of luxury homes rose particularly sharply, up 44 percent last year, the highest in the world, while in Hong Kong they''declined by 1.3 percent.

According to Knight Frank's forecast, a "clear supply-demand imbalance" in Dubai's upscale neighborhoods is expected to lead to an additional 13.5 percent price increase this year, as only 289 residential units are expected to be delivered by 2025.

The increase will drive demand among foreign nationals, like Mrs. Lau and her husband, who moved from Hong Kong to Dubai eight months ago. They rented for four months and then decided to buy a townhouse.

Mrs. Lau, who did not want to give her name, credits soaring rental prices in Dubai, which rose 25.8 percent in the first four months of this year.

"If rents and prices continue to rise, buying a home to own is quite'''A sensible decision,' she says.

She's not the only one. "Many newcomers start looking for homes to buy after the first two months because they see prices rising," says Stephanie Yam, an agent at real estateagency Bemine Properties in Dubai.

The surge of wealthy investors has spurred an increase in transactions.

In the first quarter of this year, 88 homes were sold for over $1.63 billion due to strong demand from ultra-high-income individuals - with net worth''more than $30 million. The average transaction price rose by 16 percent.

Knight Frank predicts that a very large amount - $2.5 billion - will flow into Dubai real estate from people with wealth of more than $3 million. China, Hong Kong and Singapore are expected to be the main contributors, as 90 percent of those surveyed from this group are interested in buying this year.

"Clearly we can see an element of consumption revenge, as in other parts of the world after restrictions are lifted due to Covid," said Fazalis Durrani, partner and head of Middle East research at Knight Frank. "We are likely to see this in Chinese regions in particular. "

Since the beginning of the year, real estate consultancy Juwai IQI has noticed an increase in inquiries about''real estate in the UAE from Chinese buyers. According to Juwai, the Gulf State has climbed three positions to become the sixth most popular destination for real estate purchases.

The interest of wealthy Asians has prompted Dubai-based agencies to attract buyers from the region. Huaxia Real Estate recently held launches in Malaysia and Singapore and organized tours of Dubai. D&B Properties has set up a team that specializes in China.

The Dubai real estate market is not without risks, however. It has been through a roller coaster ride over the past two decades and is highly dependent on oil prices, UBS said in its World Real Estate Index report in October.

The Swiss bank noted that rising prices for''Real estate in Dubai is likely to be high in the next quarters due to lower residency requirements, but it will gradually slow down due to higher borrowing costs.

"In the long term, given the already existing surplus and ongoing construction, Dubai's real estate market is likely to be challenging," the report said.

Dubai is also vulnerable to macroeconomic conditions globally, Knight Frank has warned. Its research said global investors are interested but are wary of rising inflation, a slowing economy, oversupply and conflicts in Eastern Europe.

The Post's Hong Kong-based editor Azar Zaidi is also looking for a suitable home, but says he will "wait until things are a bit''will settle'.