Is Dubai's real estate sector poised for a slowdown?
Dubai! This word itself bridges the way to a world of imagination that’s full of luxurious homes, beautiful skylines, and extravagant lifestyles that possess unparalleled grandeur. Perhaps such a wish to live in this man made paradise resulted in investors flocking to the city of skyscrapers.
Despite the global slowdown and spiking interest rates, Dubai witnessed a sharp increase in the value of home mortgage approvals, property prices, and residential rents. But has the real estate market reached its peak? Will there be a downturn?
Considering the spiking inflation, the US Federal Reservestarted increasing interest rates on March 17, 2022, by 25 bps. In July 2023, federal fund rates reached 5.25% to 5.50% levels, which were the highest since the 1980s. The Emirates effectively mirrors the Fed’s monetary policy because of its currency peg to the US dollar. Considering interest rates had never shot up so drastically in 22 years, a slowdown was expected in Dubai’s real estate market.
