Due to the rise in interest rates, demand for residential properties in Dubai could moderately increase.
The rise in interest rate in Dubai is anticipated to reach 4.90% by the end of 2023, this could affect customers’ ability to make purchases.
The ongoing rise in interest rates is unlikely to have an impact on Dubai real estate, but it could hinder this year’s expansion of the industry, according to experts.
According to analysts, executives, and key stakeholders, the bulk of real estate transactions in the UAE are cash transactions, thus the ongoing increase in interest rates won’t have an impact on them.
The market is anticipated to develop steadily by up to 5% this year compared to 11% in 2022.
The Dubai real estate market ended 2022 on an impressive high, shattering multiple records.
However, the real estate industry may change in 2023 in part because of the growing interest rate and how it is affecting customers’ purchasing power.
The Central Bank of the UAE increased its base rate for the Overnight Deposit Facility (ODF) by a quarter of a percentage point to 4.65% from 4.4% with effect from February 2, 2023.
The real estate market will continue to grow, albeit at a slow pace the impact of the interest rate hike will be minimal.
Cash is used in the majority of real estate transactions—roughly 70% of them because of this the market’s response to the higher interest rate will be minimal.
By the end of the year, the interest rate may reach 4.90% but the benefits Dubai provides to business owners, investors, and end users will keep luring potential consumers who will fuel the market’s expansion in the future.
A little bit over 11% price growth was witnessed in 2022. It was down from around 16% in 2021, although the Covid-19 pandemic-related price decreases were mostly the reason.