Dubai’s property market is expected to lead global cities in growth this year, though high new supply may cause a short-term correction.
According to the UBS Global Real Estate Bubble Index 2024, Dubai’s score rose from 0.14 in 2023 to 0.64, moving its ranking from 23rd to 14th place.
For the past three and a half years, property prices and rentals in Dubai have increased, driven by a population growth of nearly 230,000 since early last year. This continuous rise has led analysts to predict a possible short-term correction in the real estate market.
Last year, Dubai’s housing market was deemed fairly valued, but this year it’s categorized as a moderate bubble risk.
“Following a seven-year price correction, Dubai’s bubble risk was low in 2020. Since then, transaction volumes hit all-time highs annually, and surplus supply was absorbed. Over the last four quarters, real housing prices jumped nearly 17% and are 40% higher than in 2020. A high volume of speculative off-plan transactions, coupled with increased new supply, may lead to a short-term price correction,” UBS noted in its annual report.
Moderate risk is also present in cities like Amsterdam, Sydney, and Boston. Following significant reductions in market imbalances, cities such as Frankfurt, Munich, Tel Aviv, and Hong Kong also fall into this risk group. Vancouver, Dubai, Singapore, and Madrid join them in this category, with Dubai showing the largest risk score increase among the cities analyzed, UBS added.
According to Emirates NBD Research in September, the city’s transaction numbers are pushing total units sold in 2024 to 104,250, just 14,000 shy of the total recorded in 2023, reflecting a surge in off-plan supply launched this year.
The UBS study forecasts over 5% annual growth in Dubai house prices in 2024, followed by cities like Warsaw, Miami, Amsterdam, Tokyo, Vancouver, Madrid, Singapore, Zurich, and Sydney.
In August, Property Monitor reported Dubai’s property price growth reached its second-highest monthly increase in the current market cycle, with a 2.48% gain. This growth rate is more than twice last month’s and exceeds the average growth year-to-date.
“This surge is primarily driven by the substantial volume of new off-plan sales in areas previously balanced between new launches and ready property sales,” said Property Monitor, part of the Cavendish Maxwell group.
