Momentum in Dubai's property market set to slow down this year
Feb 1, 2023
By   Internet
  • City News
  • Housing Market Trends
  • Dubai Housing Market
  • Housing Market Analysis
Abstract: Real estate consultancy Asteco says the UAE is not immune to market turmoil.

Dubai will continue to attract strong demand from property investors and witness project launches this year, but the market's momentum is expected to slow following the global turmoil, according to Asteco.


Mortgage deals and project launches, in particular, are expected to see some decline in 2023 compared to last year as more interest rate rises are implemented and investors' spending power is likely to wane.


On the positive side, sales prices and rents will remain 'high' and the market will continue to improve its supply as developers complete ongoing projects.


In a report released on Monday, Asteco said the emirate's housing supply will increase by about 47,700 flats and villas this year, a 53.8 per cent increase over the number of homes to be delivered in 2022.


The majority of these units, around 40,000, will be flats, while the remaining supply (7,700 units) will be residential villas.


"We will continue to see new project launches [this year], but expect momentum to slow as constrained global growth will affect the spending power of international investors," Asteco said.


"With more but smaller rate hikes expected in 2023, we expect mortgage transactions to decline," HP Aengaar, Asteco's chief executive, also noted in the report.


Overall, Asteco said the UAE's real estate market will continue to see strong inward investment due to the country's safe-haven status, progressive business reforms and visa-related initiatives.


This will have a positive impact on the real estate market, although we expect the euphoria to subside and activity to slow down in the wake of the global turmoil, from which the UAE will ultimately not be immune, Asteco said.


The consultancy also noted that the emirate and the rest of the UAE had shown impressive resilience in the wake of last year's pandemic.


It said the economic recovery, coupled with higher oil prices and a revival in tourism and trade, had led to a significant jump in inward investment and record deals.


Last year, some 31,000 homes were delivered in Dubai, including 27,000 flats and 4,000 villas.


Asteco said the number of units brought into use last year was not only huge, but impressive given the global economic challenges and supply chain disruptions.


Project launches in the emirate have also accelerated towards the end of 2022, while average leasing rates for the flat and villa segments continue to climb.


According to Asteco, annual rents in the villa market grew by 23%, while flat and office rents jumped by 19%.