One of the seven emirates that make up the UAE, Dubai is synonymous with luxury, whether that’s the renowned Palm Resort or the Dubai Mall. It is also the leading business centre of the Middle East, with a fast-growing finance sector and the Dubai Financial Market stock exchange.
Expatriates dominate Dubai’s population, accounting for around 90% of total inhabitants. Some of the core elements of Dubai’s original trading infrastructure were built on the back of oil revenues, but the emirate has since successfully diversified its economy. Transport, trade, tourism, real estate, finance and its port industry are now the largest contributors to GDP, which is expected to grow by 3.7% in 2019.
Dubai’s strong population growth and investor appeal have fuelled a construction boom, with 24,000 new residential units completed on average per annum over the past decade.
However, the Dubai residential market has slowed down since end of 2014 on the back of an oil slump, slower growth in the BRIC economies, and a period of US$ strength versus other currencies. Regional challenges have shrunk purchasing power, dampened demand and subsequently placed downward pressure on residential sales and rental prices.
In the majority of markets Dubai-wide, the downward trend continued in the first half of 2018. Dubai-wide residential sale rates have decreased by 0.8% since the end of 2017. Further declines in prices and rentals are expected over the coming quarters due to the significant upcoming supply.
However, as Dubai gears up to host Expo 2020, all sectors of Dubai’s economy are likely to see some benefit, including real estate. This will be tempered by the high levels of new supply expected to be delivered over the next two years. The high-profile event will be hosted in Dubai over a period of six months and is expected to attract some 25 million visitors, putting Dubai firmly in the global spotlight.