In the recent past, the interest rate has increased in Dubai but this is unlikely to have any major impact on real estate market. This is mainly due to the fact that a majority of mortgage loans are taken on a fixed rate basis, with interest rates locked in for a period of time. As such, any hike in interest rate will not affect existing mortgages. However, it might affect individuals who are taking out new mortgages and looking at variable rates.
Additionally, the government policies regarding property ownership and taxation also favour Dubai real estate market. This means that despite any possible increase in interest rates, it will still be an attractive option for potential buyers as well as investors looking to capitalise on the city’s potential for growth.
“The year 2022 concluded on a remarkable note for the Dubai property market as it broke several records. However, 2023 may see the real estate sector heading in a different way, partly due to the rising interest rate and the way it’s impacting consumers’ purchasing power. Of course, there will be growth but not at par with the previous year,” according to Zoom property chief executive Ata Shobeiry.
It’s possible that a rise in interest rates may cause a slowdown in the growth of Dubai’s real estate sector in 2023, but it is unlikely to have a major impact on the market as a whole. Other factors, such as economic conditions and consumer confidence, also play a role in the real estate market and could offset the effects of a rise in interest rates.
It’s difficult to predict the exact impact of interest rate hikes on the Dubai real estate market, as there are many factors that can influence the market. However, some experts believe that the market may not be significantly affected by interest rate hikes, as the Dubai real estate market has shown resilience in the past and has been able to withstand economic challenges. Additionally, the demand for real estate in Dubai is driven by factors such as population growth, job opportunities, and infrastructure development, which are unlikely to be impacted by changes in interest rates. However, it’s important to monitor market conditions and to seek the advice of a professional if you’re considering making a real estate investment in Dubai.
Yes, that’s correct that an increase in interest rates can potentially cause a slowdown in the growth of Dubai’s real estate sector in 2023. Higher interest rates can increase borrowing costs for buyers and developers, which can in turn impact demand for real estate and slow down the growth of the sector. However, the extent of the slowdown will depend on a variety of factors including the strength of the economy, consumer confidence, and government policies.
Atik Munshi, managing partner at FinExpertiza UAE, said increase or decrease in interest rate is one of the factors, which does impact real estate prices, but there are many other more significant factors that give the sector momentum. Referring to investor sentiment, confidence about future outcome, expected returns and resale value expectations, he said the UAE and Dubai real estate market is still doing well particularly in the luxury segment as interest factor does not play a big role here.