Dubai's red-hot realty prices may start to cool by end of '24: S&P
Dubai's record property prices are expected to start easing by the end of next year and slightly reverse by 5% to 10% in the next 12 to 18 months, according to S&P Global Ratings.
«We do think the risk of a cyclical slowdown and potentially a mild reversal are increasing over the next 12 to 18 months,» Tatjana Lescova, S&P's associate director of corporate ratings, said at an event on Wednesday. «All the global economic uncertainty could affect the demand in Dubai.»
Although prices are expected to increase a further 15% to 18% this year and then by another 5% to 7% next year when the market gradually slows down, according to S&P.
Dubai's property market recently broke a decade-long record for home sales, while rental rates have jumped to unprecedented levels.
The rebound from a seven-year slump has been fuelled by an influx of wealthy investors such as Russians seeking to shield their assets, crypto millionaires and rich Indians seeking second homes. The government has also relaxed visa laws and introduced permits for job seekers and freelancers.
Still, Dubai has long been known for sharp booms and busts in the property market, with one of its most dramatic downturns coming in 2009, when a debt fuelled real estate crash left some of its largest developers on the brink of bankruptcy.
Although the property boom is continuing for now with sales surpassing 2022 levels in the first 10 months of this year, some signs of stress are starting to appear, according to Lescova who covers three Dubai developers with a combined market share of around 50%.
«Buyers are downsizing a little bit» with the average property size shrinking due to the rising prices, she said.
