The rising interest rate to have a limited impact on Dubai real estate

The rising interest rate to have a limited impact on Dubai real estate

- The increase in the Overnight Deposit Facility to impact the purchasing power of consumers.

- The property market to witness limited growth due to the increase in interest rate.

- The interest rate is expected to reach 4.90% by the end of 2023.

Dubai: After a record-breaking 2022, Dubai real estate may witness a moderate halt in growth due to the increase in interest rates.

With effect from February 2, 2023, the Central Bank of the UAE raised its base rate for the Overnight Deposit Facility (ODF) by a quarter of a percentage point to 4.65 per cent from 4.4 per cent after the US Federal Reserves’ eighth increase in the policy rate to bring inflation down towards its target range of two per cent.

“As the ODF was raised to 4.65 per cent from 1.5 per cent in 2022, the purchasing power of consumers was impacted. This may result in reduced demand, which, ultimately, can impact property prices,” according to the Zoom Property Insights.

The latest Insights data further disclosed that roughly 70 per cent of real estate transactions in the UAE are mostly carried out in cash. This is why the impact of the rising interest rate is going to be marginal on