Hot Property: Evaluating Dubai’s Real Estate Market since 2002

Abstract

This research aims to examine the rapid development of the real estate market in Dubai since 2002 and determine if the property market is on a more stable trajectory than in 2008 following the global financial crisis. This paper updates current literature by providing a comprehensive overview of the market and its development, extending historical market projections to predict future house price trends in various economic conditions. To do this, the paper takes three distinct periods to analyse the market cycle: the housing bubble from 2002 to 2008; second, the fallout from the global financial crisis and the subsequent debt crisis and oversupply from 2009 to 2019. The final period focuses on the resurgence from 2020 to the present, boosted by the countries handling of the COVID-19 pandemic, EXPO 2020, rising oil prices and capital flows from Russia and Ukraine following the war in Ukraine. Within each period, this paper examines the factors that contributed to the growth or decline of the sector, the breakdown of supply and demand of each property type, sale prices, and the regional distribution of new and existing properties. Using extensive government datasets and industry reports on the property market, this research identifies overlapping trends and attempts to understand what they could mean for the sector’s future. The end of this paper uses time-series data collected by the Dubai Government from 2002 - 2022 to build a SARIMAX model that projects prices for 2023 - 2025 and tests the strength of the market in different macroeconomic conditions. The results show that the present market is far stronger than that of the 2000s due to structural changes implemented by the government; however, it is still at risk from external factors that could not be included in the model.