S&P Global is doubling down on its expectation that the UAE’s residential property market could be approaching a cooldown in its latest GCC Real Estate Report (pdf), echoing its previous forecasts that we’re going to see more price growth before a reversal over the next 12-18 months. The ratings agency had forecast that prices will climb 5-7% this year in Dubai before reversing, with price declines expected to be within the 5-10% range.

An oversupply risk in Dubai could be to blame for a potential “cyclical reversal,” the ratings agency said. The report also cites global economic pressures possibly affecting demand, and points to the challenges Dubai-based developers are facing in finding fresh land, leading to higher costs for new land parcels.

Abu Dhabi is at less risk: Abu Dhabi’s property market faces less risk for reversal, owing to its slower post-pandemic appreciation than its neighboring emirate, which indicates it has yet to reach its peak.

Companies with exposure to Dubai real estate are in for “limited upside potential” given the forecast slowdown, S&P Global said.

GCC outlook: A 2-3% increase in population, coupled with GCC governments’ reforms to support new businesses and expat inflow, as well as an expected uptick in demand due to potential interest rate declines in 2H 2024, open windows for GCC real estate markets to continue growing past 2019 levels, the report notes. However, geopolitical tensions, property shortages, liquidity crunches, and funding gaps risk the sector will fall into a reversal.

ICYMI- We recently ran a deep-dive into the reasons behind the property price boom in 2023, and a breakdown of different analysts’ and pundits’ outlook for the market this year.

BINGHATTI CEO FORECASTS 14% PRICE GROWTH IN 2024-

Dubai’s property market prices are poised to “grow steadily” at a 12-14% clip in 2024,driven by factors such as population growth, increased demand for mortgages spurred by an anticipated drop in interest rates, and an influx of wealthy individuals opting to invest in the city, CEO of Binghatti Holding, Muhammad Binghatti told Khaleej Times, noting that this is a mark of “healthy growth.”

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