The leading expert of investment portfolio management, Saleh Tabakh said that Dubai’s real estate market maintains the robust demand, in spite of the high interest rate and expectations from the part of many experts that the demand for properties will decline globally.
Tabakh, who is also the CEO of Al-Andalus Courtyard Real Estate Developer, mentioned four main reasons that suggest the continuity of Dubai’s real estate momentum. “The first reason is attributed to the strength of the UAE economy, and the conversion of Dubai to a main destination for the immigrating funds and investments from several countries all over the world, thanks to the high trust in Dubai and also its status as safe refuge for investments, owing to the facilities and guarantees offered by Dubai government”, Tabakh told.
“The second reason is represented in the fact that Dubai properties are still within the affordable range. Despite the soaring cost of loans due to the high interest rates, and also the increase of the real cost of property purchasing, the prices of real estates in Dubai are suitable, as compared to their counterparts in the main global real estate hubs”, he stated.
“In London for example, the average rate for one bedroom+ hall in the good neighborhoods are about AED 2 Mn, let alone the high taxes. In the meantime, in Dubai you can buy a villa or an apartment of two bedrooms+ hall against the same price, without any taxes, , plus completely untaxable net rental returns, while the operational fees are lower than any other place”, he added.
“The third reason is the fluctuation of interest rates. They can probably decrease to more reasonable levels, if the global inflation declined within 3 years, according to the global expectations. Therefore, there is a significant category of buyers, who are currently benefiting from the available bank facilitations, as the banks try to offset the soaring interest rates, in the context of increasing deposits, particularly from outside the country. These people got bank loans of long durations, which were more difficult in the past, and the majority of these loans are mortgages”, Tabakh highlighted.
The expert of investment portfolio management noted that the fourth reason is the fact that the real estate developers offer many facilities for property purchasing, and the investors benefited from the same. “The property market proved that it is one of the safest investments, and its performance surpassed the ones of financial markets, and even the gold markets. The real estates are a palpable investment that cannot be lost as an entity, and even if their prices plummeted, it is possible to benefit from their rental returns. Thus, the property investment is the “king of investments” and the most demanded one”, Tabakh highlighted.
“Due to current scale of real estate development and handover of units, there is a shortage of house supply in Dubai for the current year, which is amounted to about 10.000 units. The analysts argue that Dubai can absorb extra 25.000 units annually, and this estimation is highly conservative”, he advised.
“To meet the demand of this year, Dubai needs to double its stock of residential units, and add 50.000 more. It is expected that 40.000 units will be accomplished in Dubai and handed over by the end of 2023”, Tabakh added.
“The rise of interest rates does not affect the borrowers currently. Moreover, the majority of property buyers who come from India, Pakistan, Russia, Egypt, and other countries used to high interest rates, up to 10%. Therefore, they see that the mortgage rates here in Dubai are more reasonable”, he noted.
“The flow of high-net-worth individuals (HNWIs), as well as population growth, lead to the increase of demand for properties. The investors and real estate buyers are often concerned regarding the futuristic increases in property prices. It is possible to compare the potential increase in property prices with the rise of interest rates”, Tabakh continued.
“If the house buyers or investors have the choice between higher interest rate now and higher price as well as the same interest rate later, they will surely choose the first one”, he concluded.
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