The effect of rising US interest rates on Dubai’s real estate market is discussed by Stuart, a subject matter specialist.
The buyer confidence over the past 12 months largely remained unwavering, according to Stuart, despite an increase in interest rates. The amount banks were ready to lend people against their wages” was the main effect rate increases had on affordability.
They would have been qualified for a mortgage of up to AED 4.5 million, using the example of a household earning AED 50,000 in 2021. The household’s borrowing ability would now be reduced by 40% to AED 3 million by 2023.
The demand for mortgage products in Dubai rose to a record high in 2022 despite this decline in relative borrowing capacity, demonstrating both locals and foreign investors’ confidence in the city’s real estate market.
Although there are no indications that interest rates will start to fall right away, we are beginning to see signs of stabilization and a perception among purchasers that they can start making plans for their future mortgage payments with a little more certainty, which has improved market mood.
The demand for home ownership in Dubai is still high despite the numerous 0.25% rises in mortgage rates. As annual population growth outpaces new properties entering the market, the market continues to have a shortage of easily accessible homes in important residential regions. There simply isn’t enough property in prime locations to meet the market’s present demand, and at the very top of the market, demand from HNWIs is pushing prices of ultra-premium properties in prestigious areas to record highs.
When we consider residential rental costs, which are also experiencing record increases throughout the city, choosing to purchase a property rather than paying a landlord is quickly evolving into an option many households take more seriously when considering setting up shop in Dubai for the long term.
It is evident from speaking with a lot of potential purchasers that more people are keeping a close eye on Dubai’s real estate projects. As a result, I anticipate that the demand for housing will continue to push Dubai’s prices up by 10-15% in 2023.
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Dubai Ranks The Highest Foreign Tourist Contributor
According to current reports, Dubai has been named the city with the highest tourist spending this year, according to the Gulf Tourism Hub. In the top-three cities listed by WTTC, Dubai has surpassed Doha and London with a collection of $29.4 million (the World Travel and Tourism Council).
In regard to international visitor spending in most cities globally following the epidemic, 2022 has been the best year. International travel became more popular as the number of instances dropped and the restrictions loosened. In a report for the World Travel and Tourism Council (WTTC) published in Riyadh, 82 cities from around the world discovered that their tourism sectors were recovering after the pandemic and that jobs in travel and tourism would increase by up to 8% in 2023 after reaching an all-time low of 5.1% in 2020.
The fact that Dubai has consistently ranked first for tourism thanks to its impressive collection of world records does not come as a surprise. Holiday house demand is rising along with the tourist industry as more foreign investors learn Dubai’s property market is a fantastic destination for short-term rentals, vacation homes, and more.
Since the World Cup in Qatar, many investors have bought vacation homes for travelers passing through Dubai on their way to the event. Now that data has revealed that Dubai is the top city for international tourism spending, we can expect a significant increase in visitors and potential real estate developments in 2023.
Not only that, but residents also have the option to spend their income on vacation homes and real estate investments, which for many serves as a second source of income as the prospect of an expanding work market draws near. We believe that this is a trend that will expand over the coming years and are enthusiastic to watch it take shape.