Indicators, which are based on official information from the 2022 Global Real Estate Valuation Index, confirm that many of the world’s major cities are seeing regular price increases, which could lead to a bubble effect. The list of these cities includes Hong Kong, Toronto, Zurich, and Tokyo. The collapse of real estate in Dubai is impossible. Here you can observe the objective pricing, which significantly reduces the risk of an unstable situation.
Crush in Dubai’s real estate industry
Regardless of the increase in demand for apartments, and houses in the UAE, experts do not observe a sharp increase in the cost associated with the excitement caused by the active arrival of foreigners who want to buy a home or commercial space. Over the past year (July 2021-July 2022), property values have risen by just 10%. Optimum pricing has also impacted rents, so a collapse is not possible at this point.
By compiling the Global Index assessment, experts compared data from 25 major cities and came to the following conclusions:
- In almost all cities, the average cost of housing increased by 10 percent.
- Experts recorded an increase in the number of outstanding mortgages.
- Apartment/home rents are increased by 12%.
Amid an increase in the number of unpaid mortgages, interest rates have doubled, which contributed to the volatility of the real estate markets around the world. Buyer demand dropped significantly as mortgage terms became unprofitable. Investors shouldn’t have invested in the purchase of apartments. Income from investments cannot cover the cost of paying mortgages.
Compared to other megalopolises, the UAE capital market has been growing lately as the demand from foreigners and wealthy investors is constantly increasing. Due to a slight increase in prices over the last year, it is profitable for buyers to purchase housing to rent it, receiving a stable income. The excitement contributes to the increase in the purchase price and rent, so at the end of 2022, the market will be at a record high (which would make it the best in the world). This brings the metropolitan economy to a new level, and also confirms that there is no risk of a bubble.