Dubai, known for its vibrant real estate market, may be entering a period of slowdown as residents and analysts anticipate a shift. The red-hot property market, which has outperformed many global counterparts this year, is prompting homeowners like Dina Habib and Karim Yusuf to reconsider their positions.
The Egyptian couple, having purchased a two-bedroom apartment in the Jumeirah Village Circle district only nine months ago, is now looking to sell it for a 26% premium over the acquisition price. Habib, in particular, aims to secure a larger property for her family at a similar or lower cost.
Analysts speculate that Dubai’s property boom has been sustained by wealthy investors, including Russians safeguarding assets and crypto millionaires. The government’s response to the pandemic and favorable visa policies have also attracted foreign buyers. Rental and home prices have surged by about 42% and 33%, respectively, since January 2020, with villa rentals averaging $88,400 a year.
Many tenants, fearing escalating rents, have transitioned to property ownership. However, concerns arise about the sustainability of the market’s current trajectory. The history of Dubai’s real estate, characterized by booms and busts, prompts caution despite recent government reforms to mitigate volatility.
While some analysts predict a moderation in price increases, others, including Taimur Khan from CBRE, believe that the population’s growth and the expanding economy argue against a significant decline. Yet, indicators such as a slight cooling in rent surges and a drop in off-plan sales suggest that 2024 could mark a turning point.
Developers, anticipating about 40,000 property deliveries in 2024, are adapting to the changing landscape. Morgan Stanley suggests a shift in developers’ focus towards earnings growth as large backlogs are executed. Dubai’s real estate giants, Emaar Properties PJSC and Damac Properties PJSC, are cautious about the potential risks despite the current economic upswing.
While Dubai’s property market has been soaring, uncertainties loom, prompting residents and industry players to closely monitor the evolving dynamics in the coming year.
By Bloomberg
