Industry Executives Attribute Double-Digit Price Increase to Foreign Worker Influx

Property prices in the UAE have skyrocketed in the past two years, with a double-digit increase being reported due to various factors. According to the International Monetary Fund (IMF), the UAE has seen the highest increase in property prices globally in 2023, surpassing all other countries.

The influx of foreign workers into the country and high demand from high net-worth individuals have contributed to the surge in property prices. Industry executives note that prices have increased significantly, pushing them to record highs. The limited supply of luxury and ultra-luxury units in prime locations has further exacerbated the situation, with demand outweighing supply.

In November 2023, per-square-foot prices in Dubai hit a record high, surpassing previous peak levels. The Property Monitor reported that prices have reached Dh1,271 per square foot, indicating the immense growth in the real estate market.

The IMF highlighted that home prices in advanced economies, Europe, Africa, and the Middle East are significantly higher than pre-pandemic levels, ranging from 10% to 25% increase. This has made housing affordability a challenge for current and prospective buyers, given the rise in interest rates and limited supply in certain regions.

With mortgage rates increasing in advanced economies and real house prices cooling down from the highs of 2021 and 2022, the real estate market is facing a period of adjustment. While some countries have witnessed a decline in real house prices, the overall trend suggests a need for prices to stabilize to reach pre-pandemic levels. The future outlook for the property market in the UAE remains uncertain, but the recent surge in prices has sparked conversations about the sustainability of the growth in the sector. So, what’s next for property prices in the UAE? Stay tuned for more updates on this evolving story.