Analysts Predict a Year of Continued Growth for Dubai Properties

Industry experts project a year of growth for the Dubai real estate market in 2023, especially in coastal parts of the city. Neighborhoods like Dubai Marina, Bluewaters, Beachfront, Jumeirah Beach Residence, and Port de la Mer are all set to see significant increases in property value.  

Both investors and demand from end-users will help drive up prices in the residential sector as the emirate continues on its upward economic trajectory. Beyond this, analysts predict that increases in tourism, especially in the context of labor and visa reform, will play an important role in driving investment in Dubai real estate. Altogether, industry stakeholders predict about 10 percent growth in real estate prices by the end of 2023.  

Steady Gains Expected for Dubai Real Estate in 2023  

Since the market began to stabilize following the initial disruption from the COVID-19 pandemic, Dubai has seen an influx of people moving to the emirate. This trend is expected to continue into 2023 with millionaires and other high-net-worth individuals recognizing the benefits of the United Arab Emirates’ stable economy and powerful infrastructure.  

This influx of new residents has driven demand in the luxury sector, which is why prices are expected to increase most dramatically in the coastal regions. During the height of the pandemic, villa prices increased virtually overnight as people sought homes that provided more space. This demand has now dissipated out into the larger luxury market  

In 2022, home values in Dubai increased by 12.7 percent compared to 2021, with the luxury market seeing an increase of 14.7 percent. Analysts expect a similar trajectory for 2023 as the market enters a period of sustained growth.  

While the general market is expected to grow by 10 percent in 2023, the luxury market will again be driving this increase and will itself likely see about a 13-percent increase in prices. Dubai continues to be an attractive location for business owners and wealthy individuals, especially with visa reform making it easy to stay for long periods of time and creating new pathways toward citizenship. This makes it more feasible for people to consider investing in property or purchasing a second home in the emirate. 

The Contribution of Tourism and Market Confidence 

In its Middle East Real Estate Prediction 2023 publication, Deloitte also pointed to significant gains in the market, especially as tourism in the region begins to return to pre-pandemic levels. Deloitte has predicted growth in all segments of the real estate market, including hospitality, commercial space, and retail. All of these segments will benefit from more tourism.  

Dubai is also working to improve tourist attractions to give people from around the globe new reasons to visit. With people now much less afraid to travel, these investments may finally start to pay off for the emirate. 

Deloitte’s growth predictions for 2023 are also significant because 2022 was such a good year for Dubai. Many analysts predicted market stabilization for the year, but the fact that prices grew a considerable amount was a testament to the strength of the Dubai market. This has not gone unnoticed by investors who are looking for new opportunities.  

Business owners are also recognizing the strength of Dubai, especially as they look for new centers of growth in novel markets. Dubai is an excellent location for businesses to find their footing in the Middle East, especially for those looking to expand from Asia or Europe.  

Some Concern About Dubai’s Growing Property Supply 

Still, some industry experts are approaching the Dubai property market with a little more hesitation in 2023. For some analysts, the quick recovery from the pandemic made sense as people sought out villas and homes with more space. The market could not keep up with demand, and the limited supply drove up prices.  

Some observers worry that supply and demand will tip the other way in 2023 as properties continue to be delivered on the market. However, with both locals and foreigners now interested in investing in the residential market, most analysts do not think this will happen. After all, the population of Dubai is expected to rise from 3.5 million today to 5.8 million by 2040. It stands to reason that the demand for property is not likely to let up anytime soon. 

As proof that demand is only continuing to increase, Dubai recorded more than 86,000 residential property transactions in 2022. This is the most on record since the prior maximum of 80,000 in 2009. Thus, while many new units will be hitting the market this year and developers are expected to announce many new projects, many analysts believe it is unlikely that prices will fall because of a surplus of units.  

In fact, Dubai has also seen an uptick in off-plan purchases, which nearly doubled over the course of 2022 from the year prior. Altogether, 2023 is looking like a promising year for sustained growth, with new investors and residents entering the market.