Dubai Real Estate Boom: Rising mortgage rates cast a shadow on affordability.

  • By Chidera Mbonu
  • April 9, 2024
The Trend

Dubai’s real estate market continues its upward trajectory in 2024, fueled by a robust economy and investor confidence. However, a potential storm cloud is brewing on the horizon – rising mortgage rates though fractional. This trend poses a slight challenge to affordability, particularly for first-time homebuyers and residents with moderate incomes.

Mortgage Rates: A cause for concern?

While the market fundamentals seem strong, rising interest rates could dampen buyer enthusiasm, especially in the residential sector. The Central Bank of the UAE raised its base rate in line with the US Federal Reserve’s tightening policy. This translates to higher borrowing costs for mortgages, hence putting a slight distress on potential investors.

Market Momentum Maintained

Despite the potential headwind from interest rates, the Dubai real estate market remains vibrant. Early data for Q1 2024 suggests a continuation of the strong performance witnessed in 2023. This is backed by high demand from both local residents and international investors seeking a foothold in the city’s dynamic economy.

Hence, the Dubai real estate market is experiencing strong demand, even as interest rates rise globally. This highlights the underlying strength and attractiveness of Dubai’s property market as an investment. While higher borrowing costs may impact some buyers, the overall demand from local and international investors remains robust.

Accessibility Concerns and Government Initiatives

The rising cost of mortgages raises concerns about accessibility, particularly for young professionals and middle-income earners. The UAE government is aware of this challenge and may explore initiatives to maintain market liquidity. These could include government-backed mortgage programs with lower interest rates or incentives for first-time buyers.

Finding an Equilibrium: Balance Growth and Affordability

The interplay between a booming real estate market and rising borrowing costs presents a complex challenge for policymakers. Navigating this requires balancing the desire for market growth with ensuring affordability for residents.

Long-Term Outlook: A Dynamic Market with Adjustments

Despite the recent rate increases, Dubai’s real estate market is expected to remain resilient in the long term. The city’s economic diversification efforts and its status as a global investment hub will continue to attract interest. However, adjustments might be needed, such as a focus on a wider range of property types (affordable housing) to cater to a broader demographic.


While Dubai’s real estate market enjoys a period of sustained growth, rising mortgage rates pose a challenge to affordability. Irrespective of the fractional increase, the reported performance of the real estate market in Dubai shows the need to key in now. Contact us today to discuss your opportunities in the real estate space.

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