Why the UAE will remain a global real estate hotspot delivering strong ROI for home buyers

While home prices and rents continue to grow in the Dubai real estate market, the longer-term value of ownership in the UAE is spurring demand

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Looking back to 2020, nobody could have predicted the emergence of the UAE’s property market as one of the strongest in the world. Over the past few years, low interest rates propelled the global economy, and that was visible from consumer spending across sectors, stock market growth, and of course a rise in home buying.

Historically however, strong economic momentum and the rapid growth has always raised concerns about possible corrections. The dotcom crash and the global financial crisis are both still fresh in public memory. With the US Fed tightening rates, the rising cost of capital has now led to questions on growth, particularly in real estate.

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So, why does the UAE remain a global property hotspot?

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Demand Despite Mortgage Rate Increase: Despite a 2 percent increase in mortgage rates over the past year, the demand for residential properties remains strong. Even with higher rates, the UAE's real estate market remains more attractive than some other global markets, like the US, where rates have soared to over 8 percent.

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Fair Value Recognition: According to UBS' Global Real Estate Bubble Index, Dubai ranks among the top 3 cities for fair value. This contrasts with cities like Zurich, Tokyo, and Miami, which are considered at risk of a housing bubble or overvalued.

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Sales Growth Across Segments: Sales have continued to grow across all segments, from affordable housing to ultra-luxury homes. With luxury transactions at $900 per square foot, Dubai remains one of the more affordable global residential markets.

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Population Growth: The influx of expatriates and professionals, coupled with a forecasted population increase to 10.20 million by the end of 2023, is driving real estate demand in the UAE. This is particularly evident in urban centers like Dubai and Abu Dhabi.

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Government Initiatives: The government's initiatives, such as extending the validity of long-term visas and allowing non-residents to secure financing with zero tax requirements, make the UAE an attractive destination for home buyers.

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Rental Increases Driving Ownership: Rental increases of 20 percent over the past five years make buying property more appealing for residents and investors, offering potential savings and long-term returns.

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Mature Market with Robust Fundamentals: The UAE stands out as a high-growth yet mature property market with well-established governance principles, protecting buyers, developers, and financial institutions.

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Government Measures to Ensure Stability: The government has implemented measures to prevent oversupply and speculation, ensuring stability and sustainability in the property market.

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Emerging Growth in Other Emirates: Beyond Dubai, emirates like Abu Dhabi, Sharjah, and Ras Al Khaimah are becoming fast-growth markets, offering affordable options with attractive amenities and infrastructure.

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Technological Advancements: The rise of technology, including digital solutions and mortgage tech, has made it easier for global home buyers to find and shortlist properties, contributing to increased sales volumes and improved efficiencies for industry stakeholders.

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