Dubai's Real Estate Is Still Doing Good Despite a Slowdown In The World

Looking at the increasing inflation, countries like the US and the Federal Reserve have started to increase the interest rates during the middle of March 2022 by around 25 bps. In The next year of 2023, the rates of federal funds touched 5.25 to 5.50 percent, which was very high since the 1980s. Because of this, the Emirates also had to copy the US to increase the interest rate to match the US dollar. If we see that the interest rates had not gone up in 22 years, a little slowdown was seen in the property market of Dubai but the city was out of it later. 

Dubai is still a desirable city, and it can be seen in the last year of 2023 when the home mortgage approvals in this city increased by 40 percent. In that same year, the mortgage rates in UAE rose by 5 percent from less than 2 percent in 2022 to the last month of 2023. Even in this situation, the pricing of the housing properties in UAE saw a huge rise, and in the first six months of 2023, there was a 6.9 percent YoY spike in this Middle East country. This rise was very fast that we have seen in 10 years.

What makes Dubai so attractive is its property price. Yes, it may confuse you, but the price of luxurious houses in Dubai is lower than in other cities in the world, like Singapore, Hong Kong, and more. According to Dubai Housing - A Real Estate Company, there was a huge demand for the luxurious properties in prime locations of Dubai by rich people from other countries like India who were businessmen and top professionals working in banks and financial services. Some of the property buyers were also crypto millionaires because some builders in Dubai also accept bitcoin as a payment.

The increase of the property price is also affecting the rental price where the rents of the houses soared by around 21.7 percent in the year 2022 which is still going on in 2024 also. Some studies showed that Russians were among the top buyers of luxurious properties but now went down which was already seen during the end of 2023 they were already in third place. 

India and the United Kingdom were also not far behind and investors from these countries bought several luxurious properties in cities like Dubai and they were among the top transactors who purchase a huge number of houses in a year. There was also a rise in the number of buyers from other countries like Egypt, Lebanon, Pakistan, and Turkey.

The reason for the Indians buying properties at Dubai in large numbers is its good pricing and connectivity to India. Other reasons for Indians to invest in the property market of Dubai are because of its safety and friendly rules for the buyers and the issue of golden visas for five to as long as 10 years, especially for people who are professionals, investors, doctors, and more. This Golden Visa is given for buying properties of more than AED 2 million.

Still, the rich Indians are among the top buyers of luxurious homes in Dubai, but for the past year, there have also been changes in the types of buyers where mid-priced properties were bought by different income groups of people in India. This was seen just after the covid. A report showed that in 2023, there were more than 430 houses sold in Dubai, whose cost was about 10 million dollars. This is huge according to the market in the world.

After the past economic slowdown, Dubai has worked a lot for its continuous development which has made Dubai a top and desirable city of economic hubs in UAE. There are noticeable changes in the financial situation where real estate amounts to around 8.9 percent of the economy. This shows the importance of real estate in handling tough situations like the pandemic where it did not slow down that much.

For securing top place the banks in UAE are still providing attractive mortgage offers. It was seen during the time of Ramadan when programmes like 'Ramadan Specials' was going on and during this period banks were giving 5 years of the same mortgage rate. This gave the borrowers a lot of ease and also if there were any chances of rates going down then the borrowers can refinance on the deal.

The chances are less that there will be a big slowdown in the future because the government in UAE has an open-door system for foreign investors, which has helped this country to do better than others in a period where there were no property transactions going on in several countries. The luxurious property market in cities like Dubai will continue to grow because of the huge demand. It is expected that the builders will also continue to launch the right property at the right location with modern amenities to attract foreign buyers.

The number of Russian and Chinese buyers has seen some decrease in Q1 of 2024, but the increase in Indian investors will keep the property market going. According to a real estate company, there will be around 13,000 yearly deliveries of more homes for six years if everything goes smoothly. But, one thing to see is that the connection between the UAE's 10 large banks and real estate has seen a decline. In the year 2008, when there was a financial crisis, the connection of banks and the property market was approx 30 per cent which has gone down to 16.2 per cent by the Q3 of the year 2023.

Some people are in confusion that the property market of UAE may see a little slowdown because of the inflation and changes in the interest rate around the world. Other reasons can be the tensions that are going on in West Asia and the war between Russia and Ukraine. From these situations, it is expected that there will be some slowdown of property transactions in Dubai, but it is not the right time to tell because Dubai has done well in difficult situations in the past. In 2024 also Dubai's housing properties will also be attracting more buyers from all around the world.