According to Asteco, Dubai will continue to see high demand from real estate investors and project debuts in 2023. However, the market’s “momentum” is anticipated to decelerate after recent global instability.
As future rate hikes are executed and investors’ purchasing power is predicted to deteriorate, it is expected that mortgage transactions and project launches, in particular, will experience some declines in 2023 compared to 2022.
Positively, as developers finish off ongoing projects, sales prices and rental rates will continue to be “elevated,” and the market will continue to add to its supply stock.
According to Asteco’s estimate, which was made public recently, the number of apartments and villas being built in the emirate would increase by almost 47,700 in 2023, or 53.8% more than they did in 2022. Around 40,000 units will be apartments, with 7,700 residential villas making up the remaining supply.
The momentum is anticipated to weaken as the spending power of foreign investors is impacted by restrained global growth, according to Asteco. Nevertheless, new project launches will continue to occur in 2023.
HP Aengaar, CEO of Asteco, stated in the report, “with more but smaller interest rate hikes expected in 2023, we anticipate a drop in mortgage transactions.”
Foreign Investment
Asteco said that due to the UAE’s image as a haven, progressive business reforms, and visa-related measures, the country would continue to witness “strong inward investment” in the real estate sector.
Although we expect the euphoria to fade and activity to reduce in the aftermath of global turbulence, from which the UAE is ultimately not immune, Asteco predicted that this would positively affect the real estate market.
The consulting company added that the emirate and the rest of the UAE have shown “impressive levels” of grit in the wake of the COVID outbreak in 2022.
It claimed that increased oil prices, a rebound in trade, and economic growth had caused inbound investment to soar significantly and transactions to reach new highs.
Thirty-one thousand residences, including 27,000 flats and 4,000 villas, were delivered in Dubai in 2022. In addition to being considered, the number of units that came online in the same timeframe was “impressive given the global economic challenges and supply-chain disruptions,” according to Asteco.
As average rental rates in the apartment and villa segments kept rising, project launches in the emirate also picked up speed toward the end of 2022. According to Asteco, rental rates for flats and offices increased by 19%, while those for villas saw a 23% yearly surge.