The UAE’s real estate market has been standing tall in the face of global economic challenges
As per the projection of the Standard & Poor’s (S&P) Global Ratings, the gross domestic product (GDP) of the United Arab Emirates (UAE) is estimated to increase by over 5% in this current year. It will beat the estimation of the world economy of 2.8%.
Tatiana Leskova, Associate Director of Corporate Ratings at S&P Global, said that whilst the global economy grew at a restrained pace with substandard levels, the UAE GDP grew more than 3% the previous year and near about 6% growth for the non-oil sector.
For this year, they expect strong momentum in tourism, hospitality, retail, wholesale, and financial technology sectors, fueling the growth for the next financial year.
The UAE’s real estate market has been standing tall in the face of global economic challenges. They can do so as they are less prone to interest rates and inflation in Western countries.
Amidst global economic challenges like higher interest rates, the number of mortgage transactions kept on increasing in Dubai, it recorded 80% of real estate transactions were done on a cash basis. In comparison the European real estate market, their purchasing power decreased since mid-2022 because of higher interest rates and higher inflation.
The Chinese real estate market has been struggling with its debt-ridden developers, and profitability has declined due to margin thinning because of price reductions. The United States recently got out of the clutches when demand slightly increased at the beginning of 2023 after a slowdown.
The Dubai market has recently witnessed an influx of Russian buyers running away from sanctions since 2022 and has become one of the largest investor groups in the city. Historically buyers from
India, Europe, and the GCC have been permanent in their purchases and are the largest investor base. Dubai is still on top for buyers looking for investment opportunities in the UAE despite rapid real estate expansion in Ras Al-Khaimah.
The World Economic Forum released a survey by its global chief economists this week that the global economy will have to face a year of downturn and uncertainty arising from severe financial stress, geopolitical tensions, and the emergence of artificial intelligence.
The WEF released a Chief Economists Outlook on Monday, announcing that an astonishing 56% of its leading economists have estimated that the global economy would weaken this current year, and 43% expect the economy to sustain or gain momentum. There is a huge majority of economists who predict that the labour markets (77%) and the financial conditions (70%) will improve this year.
Saadia Zahidi, Managing Director of the World Economic Forum, said that the latest Chief Economist’s Outlook throws light on the ambiguous state of the current economic scenario.
In the era of increasing discrepancies, the persistence of the global economy will be time-tested in the coming months of this year. Despite a slight reduction in global inflation, growth has not picked up the pace; even financial conditions don’t appear to be inviting; global tensions are on an uptrend with rising inequalities; the report highlights the need of the hour for global cooperation to generate momentum for sustainable economic progress.
For the European continent, the outlook has severely fallen since a survey conducted in September 2023. Most of the respondents, almost 77% of them, expect a weak or very weak growth outlook.
For the United States and the Middle East and North Africa (MENA) region, the outlook is somewhat weaker too, six out of ten respondents predict moderate or stronger growth in 2024.
They have estimated a noticeable growth for Latin America and the Caribbean, sub-Saharan Africa, and Central Asia. The growth for this region remains aligned with the global view of moderate growth.
China, however, stands out of the box, with a smaller majority of 69% predicting a moderate growth outlook due to reduced consumption, decreased industrial output and stress on the real estate market that is preventing an economic rebound.