Dubai property market expected to cool in 2024
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Dubai real estate continues to buck global trends
Dubai’s property market is likely to cool next year as prices slow, a new report shows.
According to a report by S&P Global, The sector is likely to grow by five to seven per cent next year.
“We do not expect a deep market disruption. Instead, we believe price increases could slow and potentially reverse slightly over the next 12 to 18 months, with price declines not exceeding 5-10 percent.”
analysts Tatjana Lescová and Sapna Jagtiani he wrote in an industry review.
Villa prices have reportedly surpassed previous highs, but apartments are lagging 10 to 20 percent below previous highs due to historic oversupply, the report said.
Dubai’s real estate sector continues to buck global trends. Since 2021, prices have increased at double-digit rates per year, approaching previous peaks, while pre-sales have also reached all-time highs.
Analysts identified several reasons for the continued dynamism of Dubai’s property market.
Foreign investors, including high-net-worth individuals, have helped sustain strong demand, particularly for prime properties. Strong pre-sales in 2023 contrast with our previous expectation that the market would stabilize. Dubai has remained relatively immune to the external pressures of the sluggish global economy, echoing the strength it showed during the pandemic.
Dubai benefits from a diversified economy. It has performed well since the pandemic despite higher financing costs for businesses and persistent inflation, which, however, remains below the global average.
“We expect economic growth in Dubai to average a relatively strong 3 percent during 2023-2024, following the post-pandemic recovery that led to average growth of 5 percent in 2021-2022. In our view, supported by strong economic performance, the government’s fiscal position is likely to strengthen and its debt burden will continue to decline as a proportion of GDP. Instead, we forecast a period of poor global growth as more indebted economies are hit by higher interest rates for longer.”
the analysts wrote.
S&P It expects continued strong momentum in the hospitality, wholesale and retail, and financial services sectors to drive growth in 2024-2025. In contrast, the real estate sector will likely slow in the next 12 to 18 months after another strong year in 2023.
The population has grown by more than 2 percent to 3.6 million according to the Dubai Statistics Center (data as of September 2023). And the number of international visitors continues to recover. Dubai International Airport served more than 41 million passengers in the first half of 2023, surpassing that of 2019. Dubai is on track to reach 17 million visitors per year, representing a full recovery in just three years.
As property prices continue to rise in Dubai, the risk of a cyclical reversal increases, analysts say.
At the same time, analysts expect pre-sales to also slow to a still healthy level. In
“In our opinion, developers will adapt their offers to demand. They are likely to continue launching premium properties, including branded residences, for which demand from high net worth individuals should be more resilient. They are also likely to launch smaller units as the price per square foot has become more expensive and buyers are starting to downsize. “This contrasts with a previous preference for larger properties following pandemic-related restrictions.”
the analysts wrote.
News Source: Khaleej Times
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