ALBAWABA – Dubai has seen a big surge in real estate sales, especially after the COVID Pandemic, with 2023 seeing a boost in property sales compared to 2022, especially from Russian buyers who took to Dubai in hopes to protect their assets after the Russia-Ukraine war started early 2022 according to The Media Line, later followed by a trend of Chinese buyers, seeing UAE’s market as a target for wealthy customers, according to property agency Knight Frank, which added expectations for the city to become a major hub comparable to New York City, London and Singapore.
However, a report by Reuters sheds light on a potential downturn for Dubai’s property market, explaining that while real-estate brings about 8.9 percent of the economy, conversations between developers, investors and brokers are discussing the future of Dubai’s boom, anticipating a correction similar to the great depression witnessed in 2008.
A research by Knight Frank, shared with Reuters, shows that in 2023, 431 homes across Dubai sold for over $10 million, setting a record and almost doubling the prior year's total, which turned Dubai into the world's biggest housing market, with prices expected to increase by 5 percent in 2024 in the main luxurious areas in the city and 3.5 percent in other residential areas.
Hakim Abdeljaouad, Managing Director in Kroll's Valuation Advisory Services practice, said that major regional developers and financial institutions are ready for any challenges, armed with lessons from previous economic downturns, with a survey from S&P Global in Dec. 2023, showing strong economical signals from industries outside of oil production.
Thousands of other business respondents are more susceptible to a prolonged slump, industry sources caution, despite banks and developers having lowered their risks, like the brokerage firms in Dubai, which, according to Betterhomes CEO Richard Waind, have increased dramatically in number from 1,200 in 2020 to over 4,000.
“Dubai has reached a tipping point and instead of jostling for recognition, the city is going toe to toe with the world’s long-established hubs as a magnet for the world’s wealthy” said Faisal Durrani, partner and head of research at Knight Frank.
According to eight sources who spoke with Reuters, the main concerns to Dubai's real estate market are the unanticipated hikes in inflation, the volatility of global interest rate policy, and the regional consequences from the Israel-Hamas conflict, while the effects of current interferences with shipping routes through the red sea still remain to be seen.
