According to one of the city’s largest real estate consultants, residential property prices in Dubai are likely to rise at a slower rate in 2023 after a record year that witnessed a more than 60% increase in total units sold. According to Richard Waind, global managing director of Betterhomes, prices are expected to rise by roughly 5% this year, after gaining 11% in 2022, which was a deceleration from a 21% spike in 2021.
“(Higher) interest rates haven’t removed the underlying demand. But they are certainly having an impact on people’s willingness and ability to pay more for properties,” Waind said, though he said the market had taken rising rates and a strong dollar “in their stride so far.”
“We’re obviously less exposed to interest rates here through the prevalence of cash purchases. So, in the UK, U.S., cash purchases are somewhere between 20 and 40% of all transactions. Over here, it’s roughly 70%,” he added. Dubai’s property market grew in 2020 as it reopened before most big cities during the pandemic and as wealthy purchasers bought up luxury units, according to Reuter News, strengthening a sector that had been stagnant since the 2014–15 oil price drop.
Russians were the largest non-resident purchasers of Betterhomes in 2022, accounting for 15% of transactions, followed by Britons (12%), Indians (11%), Italians (7%), and French (4%). Pakistani buyers came in sixth, Lebanon seventh, China eighth, the United States and Canada ninth, and Kyrgyzstan tenth, according to Betterhomes.
Russians flocked to Dubai after the Ukraine crisis, snapping up properties in some of the city’s most desirable neighbourhoods, including Palm Jumeirah and Downtown. Indians were the leading purchasers among Dubai residents, followed by Britons, Russians, Italians, and Canadians. Foreigners constitute the vast majority of the population of the United Arab Emirates.
Apartment sales increased by 73% in volume terms last year, while villa sales increased by only 3%, “mostly due to a scarcity of supply, both in the ready and off-plan markets,” according to Betterhomes’ study. Concerns over oversupply have long dogged the sector, which experienced a property bubble crash in 2009–2010, forcing prices to drop by more than half. According to Betterhomes, 34,000 additional units were added last year. Waind estimates 30,000–35,000 additional units in 2023, which he views as “a lack of supply in this market with population growth.”
