The real estate market in Dubai is competitive as always with demand for properties escalating. So are the prices in the residential segment. Yet, with geopolitical uncertainties affecting consumer and investor confidence, a mild lull is predicted in the realty sector this year, which is likely to run into the first half of next year.

A recent report by S&P Global Ratings confirms Dubai’s rated developers achieving three years of solid presale growth ahead of a cycle reversal predicted in 2024. If lingering global economic pressures undermine demand for housing, Dubai’s property market can start to cool over the next 12-18 months, says the report.

However, developers would continue to stock up on cash and improve liquidity buffers in preparation for the next trough, despite the possibility of their cash flow generation and credit metrics ‘losing ground’ for a season. Prices of properties, since 2021, had risen at double-digit rates per year, nearing previous peaks, while pre-sales had also reached record highs.

The report further confirms that more than 85% of GCC-rated real estate companies are on a stable outlook. “Close to two thirds of our portfolio is exposed to Dubai real estate, where stable outlooks (only one positive) indicate limited upside potential in the next 12 months, given our expectation of cyclical slowdown.”

On the other hand, Abu Dhabi paints a different picture from Dubai. As the capital of the UAE, it has a population estimated at 3.3 million, of which about 20% are UAE nationals. It is expected that the population would increase about 2% annually through 2026 as domestic demand and investment have largely stabilized in the post-pandemic scene.

That said, Dubai remains the top destination for builders, homebuyers and investors, where the real estate boom can be tangibly experienced regardless of the market being predicted to cool down.