Fitch Ratings: High oil prices, relocation support UAE real estate recovery

Fitch Ratings: High oil prices, relocation support UAE real estate recovery

The UAE real estate market’s recovery from the Covid-19 pandemic is accelerating, supported by improving economic performance fuelled by high oil prices as well as increasing relocations, particularly from Russia. Nevertheless, some sectors, including the Dubai office market, may take several years to fully recover due to oversupply.

The UAE real estate market was anaemic during the pandemic: Dubai's population fell by an estimated 8% in 2020 as many expatriates, who comprise about 90% of the population, had to leave after losing employment. Furthermore, economic pressures affected the carbon and non-carbon sectors, including travel, hospitality and retail. However, an effective vaccination programme led to one of the highest coronavirus inoculation rates globally, allowing the country to re-open for international business and tourism earlier than most countries. In addition, government initiatives to boost growth and competitiveness, including liberalised visa and residency rules, helped to increase the population.

These initiatives catalysed the Dubai real estate sector’s recovery in 2021, with the population increasing by an estimated 2%. The country’s economy and real estate market have been further boosted in 2022 by increased oil and gas prices, particularly driven by the Russia-Ukraine war and the consequent redirection of global hydrocarbon trade flows. The sector is