UBS assesses Dubai housing market bubble risk as elevated — The National
In Dubai, UAE, the indicator of bubble risk in the residential real estate market has increased over the year, but the city still ranks among the most affordable for home purchases among the 23 cities analyzed. This is stated in a UBS study cited by The National.
Dubai scored 1.16 points in the UBS Global Real Estate Bubble Index, compared with 1.09 points a year earlier. This placed the city in the category of markets with elevated risk, alongside Miami, Seoul, Geneva, and Lisbon. UBS classified only Zurich and Tokyo as high-risk markets.
Housing affordability
At the same time, a skilled service-sector worker in Dubai needs about five annual incomes to buy a 60-square-meter apartment near the city center. By comparison, such a purchase requires 11 annual incomes in London and 15 in Hong Kong.
UBS noted that buying a home in Dubai remains relatively attractive compared with renting, despite high mortgage rates. The bank suggested that current tenants could take advantage of slowing price growth and, in some cases, price concessions to purchase property.
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Market cooling
According to UBS, inflation-adjusted housing prices rose by only 0.4% year-on-year in the second quarter, while real rental values declined by 4%. The index assesses the risks of housing prices becoming detached from incomes and rental rates, as well as economic imbalances, including excessive lending and construction activity. At the same time, it does not predict whether a correction will occur or when.
Consulting company CBRE reported that residential property prices in Dubai increased by about 1.9% year-on-year in the second quarter: apartment prices rose by 1.3%, while villa prices increased by 5.7%.
UBS believes that uncertainty over the resumption of an inflow of high-income people amid the war related to Iran will put pressure on the premium segment of the market. Emaar Properties founder Mohamed Alabbar said he expects a market correction of 5–10% due to the emergency situation, while forecasting a more balanced situation in the city in 2027 due to the arrival of significant new supply.
