Dubai will continue to attract strong demand from property investors and witness project launches this year, but the “momentum” in the market is expected to slow in the wake of global turbulences, according to Asteco.  

Mortgage transactions and project launches, in particular, are forecast to see some declines in 2023 compared to last year, as more rate hikes are implemented, and investors’ spending power is likely to weaken.  

On the positive side, sales prices and rentals rates will remain “elevated”, while the market will continue to boost its supply stock, as developers complete ongoing projects. 

In its report released on Monday, Asteco said around 47,700 apartments and villas will be added to the emirate’s housing supply this year, up by 53.8% from the number of homes delivered in 2022. The bulk of the units, around 40,000, will be apartments, while the remaining supply (7,700) will be residential villas. 

“We will continue to see new project launches [this year] but the momentum is expected to slow, as constrained global growth will impact the spending power of international investors,” Asteco said. 

“With more but smaller interest rate hikes expected in 2023, we anticipate a drop in mortgage transactions,” HP Aengaar, CEO of Asteco, also noted in the report. 

Inward investment 

Overall, Asteco said the UAE’s property market will continue to see “strong inward investment”, thanks to the country’s safe-haven status, advanced business reforms and visa-related initiatives. 

“This will have a positive impact on the real estate market, although we anticipate the excitement to subside and activity to slow in the wake of global turbulences, from which the UAE is ultimately not immune,” Asteco said. 

The consultancy firm also noted that the emirate and the rest of the UAE demonstrated an “impressive level” of resilience in the aftermath of the pandemic last year.  

It said the economic recovery, coupled with higher oil prices and a revival in tourism and trade, led to a significant jump in inward investment and record transactions. 

Last year, around 31,000 homes were delivered in Dubai, including 27,000 apartments and 4,000 villas. The volume of units that came on stream last year was not only significant,  but it was also “impressive given the global economic challenges and supply-chain disruptions”, Asteco said. 

Project launches in the emirate also accelerated towards the end of 2022, while average leasing rates in the apartment and villa segments continued to climb. The villa market recorded a 23% increase in annual rental growth, while rental rates for apartments and offices jumped by 19%, according to Asteco. 

(Writing by Cleofe Maceda; editing by Seban Scaria)