No effect of interest rate hike on the real estate market, according to industry leaders in Dubai

Only 25% of investors in Dubai are choosing mortgages; thus, the rise in mortgage rates hasn’t diminished demand for real estate.
Local real estate industry executives noted that mortgage rates are still lower compared to many emerging and advanced economies.
Afzaal Hussain, chief operating officer, Azizi Developments, said there is not much impact of recent interest rate hikes on the market, but there might be on the secondary market.
“In the past four months, there has been no impact from rising interest rates. Compared to Europe and Asia, mortgage rates are lower in the UAE,” he said during a panel discussion at the Cityscape Dubai 2022.
The UAE Central Bank has increased interest rates in the past few quarters in line with the Federal Reserve rates due to the dirham’s pegging to the dollar. The interest rates have been hiked in order to rein in inflation.
Real estate consultancy CBRE said in its latest quarterly report that despite mortgage rates increasing, particularly post-promotional rates which have reached 6.2 percent on average in September 2022, up from 3.9 percent a year earlier, there has not been a marked increase in post-handover payment plan offerings as yet.
Augostino Sfeir, chief investment and strategy officer, Imkan Properties, said the majority are cash buyers and only 25 percent of transactions are backed by a mortgage. “Buyers are cautious because of the high increase in villa prices, but we can see the apartment market also catching up,” he said.
Afzaal Hussain said new project launches are on the rise to cope with the demand as Dubai is benefiting from geopolitical events taking place around the world.
“We’re seeing demand from Europeans, Russian and GCC investors. This is the best time for Dubai developers to launch as many projects as they can and this is what developers are doing.”
He continued by saying that the UAE’s Golden Visa programme is a key draw for investors because many individuals now consider the country to be their first home.