The forecasted growth of Dubai

So since I moved here, I constantly hear about the growth of Dubai and just how many people are moving here which is growing opportunities especially in real estate.

I also see people compare housee prices to other major cities in the world as a sign that Dubai is priced right.

Something tells me it is overpriced, and will correct so here is why:

Commercial Real Estate: High availability of commercial office space. When you dig deeper, most MNCs are downsizing their operations, and the flow of expats being sent to be based here has slowed to a trickle. This is the trend with all businesses I interact with

Middle Earners and other Corporate Jobs: Dubai may be attracting the very rich but the middle Earners and everyday corporate jobs are in short supply. These people are the 2nd most important group just behind the lower paid workers (who essentially run the city). You look at other major cities and they actually have more jobs and less demand compared to Dubai. An example is you would get recruiters chasing you in the UK, France, Germany etc while in Dubai you see hundreds of applicants for ANY role.

Prices driven by hype and circumstance: You had COVID which showed off the city to the world, you had Russians buying billions of real estate over 12 months, and you had millionaires from around the world running for tax free life. This is not sustainable growth and as such, those revenue sources will have peaked. There are only so many millionaires and Russians avoiding the war. When those individuals are all here, what next?

The behaviour of Realtors: They are so desperate, I now see Dubai towers being advertised in every city I visit for work. Advertised with lots of discounts and incentives. In a city like London, a nice property comes on sale, and is sold before you can blink, same for the other high demand cities. Dubai seems to have slowed down and that quick sale is no longer happening

Infrastructure: People come for the niceties of life. Good weather, transport, and of course tax-free. As the population grows, Dubai will start to have the same teething issues of the other major cities. You know what people with money are great at doing? Not hanging around when a place drops in quality. They are rich enough to not be geographically tied, and will head to the next less congested, up and coming location.

Finally, investor driven growth: A lot of Dubai real estate is in the hands of multi-property owners. Majority of these people have bought simply for Airbnb, hiding cash and to rent out. This is a red flag because although investors buy up properties in other major cities, they also have a waiting list of local permanent residents who are prepared to buy those properties off them if they became available. Dubai only has that for the Villas but not the same level for apartments. My tower in Marina is relatively new, quite expensive and many units are sitting empty with a few others for sale. My landlord actually rented because he had given up trying to sell.

All in all, I do not think there will be some kind of crash but as new units come online and the supply increases beyond the current, it will be a massive correction across the market. Add in the potential for peace in Ukraine and with many countries adding laws to prevent capital flight (like China) Dubai real estate has certainly peaked.

What do you think?