S&P Global no longer expects Dubai’s residential property market to cool in 2024, citing sustained high demand in a recent report. A growing population — supported by recent visa reforms — is fueling demand, with Dubai’s population expected to reach 4 mn by 2026. High rental prices are also to thank, boosting purchases in the primary market.

Construction delays could also drive prices up in the short term, alongside population growth helping to absorb the new supply.

S&P Global pushed back its expectation of a “cyclical slow down” to no earlier than 18 months from now, after having previously expected a slowdown later this year or early next year.

This should come on the back of new supply: Developers are preparing to deliver some 182k units over 2025-2026 from presales in 2022-2023. The influx of new supply, surpassing the average 40k annual units delivered pre-2024, “could saturate the unfulfilled demand and lead to lower prices and rents,” S&P Global said. Prices for ready properties are expected to continue rising slightly.

Dubai developers are set to pivot toward affordable and mid-market properties in 2025, as demand in the emirate’s luxury segment moderates, according to the report. The pace of new launches is likely to slow over the next 1-2 years as developers adjust their offerings to align with changing market dynamics.

Major developers are financially well-positioned, with Emaar, Damac, and Sobha shielded against weaker market conditions by “robust revenue backlogs after strong presales.” Any market slowdown is expected to impact smaller developers first, who may face working capital strains and reduced cash flows due to their narrower margins and limited negotiating power.

Inflation and high interest rates are not a concern, but regional tensions are: “Dubai’s residential market remains undeterred by local inflation and high interest rates since most transactions are not funded by mortgages,” S&P Global said. The ratings agency cited prolonged regional conflict as the primary risk to the market, potentially affecting investment and population growth.

But we’re in the clear for now: “The escalation of geopolitical conflicts in the Middle East has had no significant effects on Dubai’s residential real estate market,” the ratings agency said.

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