Global Headwinds Fail to Stifle Dubai Property Boom

The UAE’s real estate market has outpaced both advanced and emerging economies over the past two years, according to the Bank for International Settlements. As central banks around the world tighten monetary policy, Dubai is setting itself apart. The emirate’s residential property prices have surged 28%, far outstripping the 18% growth in advanced economies and 14% in emerging markets.

While most of the world’s property markets grapple with the fallout of the monetary policy tightening, Dubai seems to have been insulated. Two years ago, the ‘race-for-space’ phenomenon — a post-lockdown rush for larger homes — sent prices soaring elsewhere, but the UAE’s well-supplied market held steady. Now it’s catching up.

Interest rate hikes have brought fears of a housing market slowdown in many countries, but Dubai is bucking the trend. With 70-75% of property transactions conducted in cash without mortgage, compared to 25-50% in the EU, UK, and U.S., the exposure to the interest rate changes is limited.

Dubai’s population growth continues to underpin demand. Almost 90% of the UAE’s population, currently around 10 million, are immigrants. Projections indicate the total will reach 11.1 million by 2030. Major cities, particularly Dubai and Abu Dhabi, are the preferred destinations.

The National recently noted an uptick in UK expatriates moving to Dubai after the end of the lockdowns, drawn by the prospect of remote work and the UAE’s tax advantages. With remote working becoming a norm and governments all over the world resort to raising taxes to pay back soaring post-pandemic debt, the zero income-tax Gulf country seems a place to be in.

Arabian Business quotes a report which predicts Dubai’s real estate market will continue to prosper, with values expected to hit AED 300 billion by 2023. According to the analysis, “the Dubai real estate market is set to experience unprecedented price growth by the end of 2023, surpassing major cities such as Miami and Paris.”

Dubai’s appeal is clear, according to online property platform Housearch.com: “Dubai’s property market is an appealing investment hub for both local and international buyers due to its lucrative return on investment and high rental yields. The robust regulatory framework, transparent buying process, and high capital appreciation rate are some of the key drivers attracting investors to Dubai’s real estate sector.”