Dubai real estate: A positive outlook for 2023 Dubai real estate: A positive outlook for 2023
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Dubai real estate: A positive outlook for 2023

Dubai real estate: A positive outlook for 2023

We believe that the Dubai property market will continue to see exceptional demand in the new year, and that 2023 will be another record year for the market

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Looking back at recent years from the perspective of a real estate industry insider, there’s a strange feeling of not having enough words to describe everything that has taken place, and yet, ironically enough, also being left speechless. This peculiar feeling is a result of all the tremendous things that happened in Dubai over the past few years, once again confirming that we are lucky enough to live in one of the “greatest places on Earth”.

While we optimistically write our New Year’s resolutions, it’s good to reflect on the things that have created our reality today, all the while making plans for the year we’ve just welcomed. Let’s reflect on several Dubai property fundamentals, that since the autumn of 2020, have changed forever. Here’s how, and to a similar degree, why.

Pandemic tourism and migration

Affluent individuals and families around the world, predominantly from Europe, decided to visit Dubai for the first time, since it was one of very few places that was open for tourism. It was the obvious alternative to ski resorts in Courchevel, Gstaad, and other popular winter destinations which had closed borders at the time. As these visitors became more attracted to the prospects of the city, many of them decided to call it home, while others decided to make it a new holiday destination, fuelling demand for property, particularly in the high-end segment of the market.

This, coupled with the Expo Dubai 2020 bonanza, incredibly competitive immigration reforms and golden visa schemes, put Dubai on the world map and heightened its status among its global peers.

Challenges in competing countries in Asia: Hong Kong’s appeal has lessened since China strengthened its influence on the Chinese Special Administrative Region (SAR). This reinforced Dubai’s position as a trade, tourism and financial hub, and has taken significant market share as a result. In addition, Singapore had its borders closed for a very long time – further reinforcing Dubai’s competitive advantage.

The Russia-Ukraine crisis

With the crisis still continuing and sanctions in place on Russia by the global community, Dubai has become a new hub for its high-net-worth denizens, with capital from affluent individuals and institutions from Russia and its neighbours continuing to pour into the Dubai property market. This took liquidity levels to new highs in Q3 2022, with Russians being among the top foreign buyers in Dubai’s property market. Of course, the strength of the Russian ruble against major currencies has played a pivotal role in making this market a competitive one. This trend is set to continue well into 2023.

Moving forward…

The main catalyst for further growth is China. This market has been closed for nearly three years, at a time when investment from China into Dubai was growing at its fastest rate. We expect this bottleneck to open soon, with the Dubai market benefitting as a result.

In addition, as gaming is introduced in the country, a new population is set to make its way to Dubai, adding a new demographic to the demand mix. Finally, as rent prices expand at their fastest rate, and banks continue to lend to individuals, more individuals are making the property purchase decision, again fuelling demand growth. It will be interesting to see data on mortgage numbers at the end of the year, with borrowing rates growing steadily and three-month Emirates Interbank Offered Rate, also known as EIBOR, at 3.8 per cent.

The bottom line

We believe that the Dubai property market will continue to see exceptional demand in the new year, and that 2023 will be another record year for the market.

Abdullah Alajaji is the founder and CEO, Driven Properties

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