Regulatory UpdateJanuary 1, 20233 min read

Can Dubai's Momentum Continue in 2023?

After another record year, the market enters 2023 with strong demand but higher interest rates. The forces that will shape the year ahead.

Sarah Al-Maktoum

Senior Market Analyst

Oxford-educated economist specializing in GCC real estate markets. Sarah's research has been featured in Financial Times, Bloomberg, and Arabian Business.

Dubai's property market enters 2023 after another exceptional year. Transactions in 2022 surpassed 2021's record, prices rose across most segments and demand from international buyers remained strong. The question now is whether momentum can continue as interest rates rise and new supply approaches.

Forces supporting the market

Population growth: new residents continue to arrive.
Residency: Golden Visa and other long-term options.
Wealth migration: high-net-worth individuals relocating.
Economy: tourism, trade and business activity are strong.

Forces that may slow it

Higher interest rates raise mortgage costs. Off-plan supply will begin completing over the next few years. Affordability is becoming a concern for some residents.

What we expect

We expect continued demand but more moderate price growth, with greater differences between segments and locations.

Opportunities

Ready homes in established areas, well-located off-plan projects from strong developers and income-producing properties remain attractive.

Strategy

Focus on quality and location, avoid overpaying in overheated segments and use financing conservatively.

Corporate tax and property owners

The UAE's new federal corporate tax takes effect for financial years starting from June 2023, at a standard rate of 9% on taxable profits above a threshold. Individuals who own property in their personal names and earn rental income are generally not expected to be subject to corporate tax on that income, but property held through companies may be. Owners who hold real estate through corporate structures should take professional advice on how the new rules apply and whether any changes to their structures are appropriate. The introduction of corporate tax does not change the absence of personal income tax, which remains one of Dubai's key attractions for residents.