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Exciting Opportunities in Dubai's Real Estate Market

Inspired from UBS Global Real Estate Bubble Index 2023

Dubai’s real estate market is on an impressive upward trajectory, fueled by strong market fundamentals and a thriving rental market. This resurgence has defied seven years of falling house prices and presents a golden opportunity for those looking to invest in real estate.

The rental market is experiencing a remarkable boom. Notably, nominal rental growth has significantly accelerated since mid-2022, with positive trends observed across all the locations analyzed, particularly in Singapore and Dubai.

Amidst the backdrop of general inflation, nominal household incomes continue to rise steadily compared to the previous decade. At the same time, mortgage lending growth has halved in the last four quarters, resulting in a decrease in aggregate household debt relative to economic output, particularly in Europe.

In 2021, Dubai's owner-occupied housing market staged a remarkable comeback after years of falling prices. This revival is supported by a substantial reduction in risk scores over the past decade. Housing prices have seen a double-digit increase over the last four quarters, driven by robust income growth and a flourishing rental market. In fact, rental growth has outpaced the growth in owner-occupied prices, underscoring the market's fair valuation. Despite Dubai's cyclical nature and historical overbuilding, strong price momentum is expected to continue in the coming quarters.

This resurgence in Dubai's real estate market has resulted in significant profits, with prices surging by 15% in inflation-adjusted terms between mid-2022 and mid-2023. The luxury property segment has witnessed even more substantial price increases. Dubai's appeal to global real estate investors is further enhanced by a new visa program with flexible residency requirements, no personal income tax, and early easing of travel restrictions during the pandemic.

Furthermore, Dubai has enjoyed robust economic and household income growth since 2021, outperforming other global cities. This has led to record-high residential transaction volumes. While inflation-adjusted prices are still around 25% below their 2014 peak, the rental market has seen rents rise by 20% in inflation-adjusted terms over the last four quarters. As many newcomers opt to rent before considering a purchase, the market remains in a fair value range.

Dubai's real estate market is brimming with potential and opportunities. Now is the time to explore and invest in this exciting and dynamic market.

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