Will Dubai be affected by the recession?

Will Dubai be affected by the recession?

According to survey data, confidence among HNW investors throughout the world has plummeted to pre-pandemic levels due to ongoing concerns about the economic and market impact of inflation and the crisis in Ukraine.

Almost three-quarters of investors are now concerned about making poor investing selections in the present market and are hoarding cash.

Does this suggest that Dubai will face another recession?


Dubai real estate is prepared to defy global recession fears

Despite global economic worries, Dubai real estate will continue to prosper and develop, according to analysts, since the government's prompt efforts to preserve market stability have improved investor confidence.

According to analysts, executives, and industry experts, Dubai has solidified its position as a worldwide commercial, tourist, and financial centre, and high net worth people, millionaires, and investors will continue to engage in the real estate sector.

They claim that visa changes, investor-friendly laws, and ease of doing business will keep the Dubai real estate market resilient as it navigates the global recessionary trend caused by the Russia-Ukraine conflict, rising oil costs, and global inflation.


Stability on the cards

According to Haider Tuaima, director and head of Real Estate Research at ValuStrat, the Dubai real estate market is anticipated to stabilise in the medium term, and any unfavourable feelings may hasten this tendency.

Tuaima stated that strategic decisions implemented by the government since 2019, such as balancing supply and increasing demand, as well as the 2040 urban plan and improving market transparency by openly sharing transactional data, help drive the property market toward more healthy and sustainable growth.

Despite geopolitical concerns, increasing global inflation, and oil prices, sales transactions in the Dubai property market reached approximately Dh160 billion in the first eight months of this year. The market is projected to continue its upward trajectory, but experts warn of slower growth as major economies such as the United States, China, and Europe face recession.

The latest PMI statistics showed that economic activity worsened from the United States to Europe and Asia, raising fears that rising prices and the conflict in Ukraine may push the world into recession. The numbers present a grim picture of the global economy, with most central banks continuing to focus on managing inflation by hiking borrowing costs.

"It will inevitably have an effect. However, with Dubai solidifying its position as a worldwide business and tourism destination, different visa programs, and a diverse variety of homes catering to a wide range of purchasers, the impact is anticipated to be mitigated ", said Robert Thomas, Agency Director at real estate consultant Core.


Record-breaking sales

According to Ata Shobeiry, CEO at Zoom Property, despite certain global issues, Dubai real estate will emerge stronger.

""Following a strong first-half performance and record-breaking sales in July and August, the Dubai property market is well-positioned to face the difficulties posed by the global crisis. In this sense, I believe the market will stay stable and continue to attract international investors and HNWIs ", he explained.


There is no fear of a recession

According to Lotfi Ayoub, founder and CEO of Quatro Properties, Dubai real estate would be unaffected by the global economic downturn.

He believes that the Dubai property market would be unaffected by the global crisis, despite the fact that European politicians have taken many steps to restrain inflation.
With over 19 years of expertise in the GCC, Lotfi Ayoub feels that the Dubai property market has proven its durability this year with significant transactions.

However, timely government steps and efforts given by development enterprises aided a speedy recovery, and the Dubai property market is presently standing solid, delivering record-breaking statistics month after month, he added.

"The emirate saw a surge in luxury trades. I have never seen such an increase in luxury residences in the previous ten years. Now, the government has announced new programs to reduce residence regulations, including golden visas, investment visas, and residency extensions after expiry, among other things", he stated.

"We have seen a lot of encouraging indications, such as an increase in the number of mortgages, rental transactions, and rising demand for homes in the emirate. By 2025, Dubai will host several new exhibits, and new job seekers will be granted a six-month visa, as opposed to Canada, the United States, and Europe", he added.

"No one can make life easier than the UAE", Ayoub finally said.

 

This is well explained. And yes, Dubai will be affected by the recession in much the same way that any other major metropolitan area is: with less money being spent on luxury items like mansions and cars.

However, Dubai has an economy that is built on tourism and trade. Because these industries are less affected by recessions than other sectors, it's unlikely that Dubai will experience as severe an economic downturn as cities whose economies are more dependent on manufacturing or consumption (i.e., New York City).

I also think this applies to real life situations because I've lived in Dubai for six years now and I have seen firsthand how people react to economic downturns here—they try to make do with less while keeping up appearances so as not to lose face. It's a cultural thing; they don't want anyone knowing they're struggling financially because then they'll lose social status and possibly their jobs.

 

This is true, Dubai will be affected by the recession. Dubai's economy is based on investment and tourism, which are both industries that have been hit hard by the recession. In addition, it's a fairly small city with a very small population and therefore does not have many other economic sectors to fall back on when one or two of its main industries fail.

The best way for Dubai to avoid being affected by the recession would be to diversify its economy as soon as possible so that it isn't dependent on just a few industries or types of employment (i.e., if you don't have any financial institutions, then you need to find another way to make money).

 

Yes, and it's no surprise. Dubai is a global hub of commerce, so of course it would be affected by a global economic downturn. In fact, many people are saying that Dubai may be one of the first major cities to recover from this recession because it is so heavily focused on business and tourism—two industries that aren't as sensitive to economic downturns.

The thing about Dubai is that it's kind of like a desert oasis: It has all of these beautiful sights and sounds but also has a very unique culture that isn't found anywhere else in the world (or even in other parts of the Middle East). This makes it an ideal place for tourists who want to experience something new while still having access to all of their favorite amenities from home.

 

Dubai is not recession-proof, but it is faring better than most places. The recession has had a negative effect on Dubai's luxury real estate market, but construction and other key industries are still doing well. The city's diversified economy should help it weather the storm.

That said, no one can predict the future, and if the global recession worsens, Dubai could be affected. But for now, it seems to be holding its own.

 

Don't think there's any economy that won't be effected.

 

This is true, Dubai will be affected by the recession. Dubai's economy is based on investment and tourism, which are both industries that have been hit hard by the recession. In addition, it's a fairly small city with a very small population and therefore does not have many other economic sectors to fall back on when one or two of its main industries fail.

The best way for Dubai to avoid being affected by the recession would be to diversify its economy as soon as possible so that it isn't dependent on just a few industries or types of employment (i.e., if you don't have any financial institutions, then you need to find another way to make money).