The global recession is set to take its toll on Dubai’s property market as higher mortgage rates and the ongoing cost of living crisis will result in a rise in property prices in Dubai as foreign demand gets reduced, a recent Reuters poll suggested.
The Emirates capital faced a market downturn in 2020. However, it staged a strong recovery as the authorities eased most of the COVID-19 curbs much before the rest of the world.
The property market analysts now believe that the recovery was fragile and uneven. The oversupply of residential properties backed by rising interest rates will fuel the latest crisis.
The price tags will remain at 6.5% this year and 3% in 2023, very much opposite to Canada, Australia and New Zealand, where property values will fall in the next few months.
During an interaction with Reuters, Haider Tuaima, director and head of real estate research at ValuStrat, said, “Demand for residential properties has reached an all-time high this year, but this trend could change due to the rising cost of living, increasing mortgage rates, and anticipated new supply, Smaller apartment units in areas where much new stock is anticipated, have already seen prices stabilise, and most likely face negative growth in the short to medium term.”
The report comes at a time when the Central Bank of the United Arab Emirates has increased its base rate by 225 basis points, keeping in pace with the latest U.S. Federal Reserve hike.