Warren Buffett, the legendary American investor, once remarked that one should buy a home “such that you’d be content to own it in the absence of any market”. The best housing investments, in other words, are not about short-term gains, but about long-term fundamentals, like the desirability of the location, safety, convenience and quality of life.
Nonetheless, market movements often tell an important story. Dubai’s property market is shifting gears after half a decade of tremendous growth. Recent analysis from Moody’s, a ratings agency, suggests that the lofty price growth residents and investors have experienced in the past five years, as well as transaction volumes, are set to moderate as new supply comes online.
Those who remember dramatic market corrections after major rises in previous decades might wince. But this is almost certainly no bust. Supply was always going to catch up with demand, and this is the natural and healthy easing of an extraordinary expansion driven by real demand rather than speculative excess.
Over the past five years, Dubai has been a popular place to be. Apartment prices in the city centre more than doubled in dollar terms, outpacing almost every other global city. Total property sales surged, with last year’s transactions reaching record sums. But by and large, transactions have been driven by a rush of new residents and end-users. Dubai’s population has climbed sharply since the end of the Covid-19 pandemic – from just under 3.5 million to four million – buoyed by professionals relocating with families, entrepreneurs establishing new offices and a rising cohort of longer-term expatriates attracted to employment opportunities in a globally connected business hub.
Importantly, those buying property in Dubai these days do so within a well-regulated and fiscally sound sector. In recent years, developers have become disciplined, banks hold healthier balance sheets and regulatory frameworks are stronger than in previous cycles.
Price corrections, moreover, will be welcome among those hoping to get on the property ladder in a city where authorities are increasingly focused on maintaining affordability. In recent months, Dubai’s government has committed to making education cheaper, increasing public transport options, expanding health care and creating more recreational public space. Combined with a moderation in property prices, these initiatives provide a formula for sustainable, consistent, long-term interest in Dubai. Economic diversification – in finance, technology, tourism, logistics and the cultural sector – has expanded the base of people who need homes, and the introduction of long-term visas for families makes it likely that their children will one day become home buyers, too.
The market will continue to move, undoubtedly, in the months and years ahead. But the core features of Dubai’s property market – regulatory strength, ease of transaction and demographic momentum driving consistent demand – are here to stay.
