How big is the risk of Dubai real estate prices finding themselves in a bubble? Here's what a Swiss bank says

Real estate prices in Dubai are fairly valued despite the highest growth of any major city. According to the UBS Global Real Estate Bubble 2023 Real Estate Index, the housing market in Dubai is fairly valued despite its reputation as a geopolitical haven, which has recently led to a surge in demand for renting and buying property. Property prices in Dubai have risen the most among all major cities in the past four quarters, the Swiss bank said, adding that prices will remain stable in the coming months as the hot rental market offers investors and owners high returns.

For the study, UBS analyzed residential real estate prices in 25 major cities around the world. Real estate prices in the emirate rose at the fastest pace in a decade, climbing nearly 17 percent. At the same time, rents rose even faster, by 22.6 percent, according to international real estate consultancy CBRE. Interest in the local real estate market has grown significantly since the government's successful fight against the pandemic, attracting wealthy people from around the world.

The Swiss bank noted that Zurich and Tokyo remain in the real estate bubble risk category, so investors should be very careful when putting their money in these two markets. He added that Toronto, Frankfurt, Munich, Hong Kong, Vancouver, Amsterdam and Tel Aviv, which were previously in bubble risk, are now all in overvalued territory. He noted that some cities are already laying the groundwork for the next real estate price surge. "Hybrid performance has not dampened demand for urban living in a sustainable manner, and the housing shortage is likely to intensify as fewer building permits have been issued recently, especially in European urban centers," it said.