STOCK Dubai Skyline
High demand in the Dubai property market is closely linked to increasing oil prices, as well as a significant boost in immigration levels last year. Image Credit: WAM

The Dubai property market is fairly valued and has no bubble risk, even as other top metropolitan cities across the globe are looking at highly elevated prices exhibiting price bubble characteristics, a report said on Wednesday.

According to the UBS Global Real Estate Bubble Index 2022, a yearly study by UBS Global Wealth Management’s Chief Investment Office, Toronto and Frankfurt have significant imbalances in their housing market with prices out of sync with rising interest rates. Risks are also elevated in Zurich, Munich, Hong Kong, Vancouver, Amsterdam, Tel Aviv, and Tokyo.

“In the US, all five analyzed cities are in overvalued territory with the imbalance more distinct in Miami and Los Angeles than in San Francisco, Boston, and New York. Housing markets in Stockholm, Paris, and Sydney remain overvalued despite some cooling trends. Other housing markets with signs of overvaluation include Geneva, London, Madrid, and Singapore. Sao Paulo is fairly valued alongside Milan and Warsaw. Despite a buoyant year, Dubai’s housing market is in fair-value territory too,” the report said.

The report said high demand in the Dubai property market is closely linked to increasing oil prices, as well as a significant boost in immigration levels last year.

“Housing prices have risen by 10 per cent between mid-2021 and mid-2022. Rents have even outpaced home price growth over the last four quarters. Accordingly, the market remains fairly-valued,” the report said.

Valuations at peak level

Nominal house price growth in the 25 cities analyzed accelerated to almost 10 per cent on average from mid-2021 to mid-2022, the highest yearly growth rate since 2007. In fact, all but three cities – Paris, Hong Kong, and Stockholm – saw their house prices climb. On top of this, an acceleration in the growth of outstanding mortgages was evident in virtually all cities, and for the second year in a row, household debt grew significantly faster than the long-term average, according to the report.

Rising rates boost imbalance

As a result of low interest rates, home prices have continuously drifted apart from incomes and rents over the past decade. Cities in today’s bubble risk territory have experienced price ascents by an average of 60 per cent in inflation-adjusted terms during this period, while real incomes and rents have increased by only about 12 per cent, the report said.

Mortgage rates have almost doubled on average across all cities analyzed since their lowest point in mid-2021. Combined with notably increased real estate prices, the amount of living space that is financially affordable for a highly-skilled service worker is, on average, one-third lower than it was right before the pandemic.

Claudio Saputelli, Head of Real Estate at UBS Global Wealth Management’s Chief Investment Office, said: “Inflation and asset losses due to current turmoil in the financial markets are reducing household purchasing power, which curbs demand for additional living space. Housing is thus also becoming less attractive as an investment, as borrowing costs in many cities increasingly exceed the yields of buy-to-let investments.”

Game over?

The still robust labour market has become the last pillar of support for the owner-occupied housing market in most cities, according to the report. “With a deterioration of economic conditions, this too is at risk of faltering.”

The bubble index

(Index scores for the housing markets in select cities)

Bubble risk

Toronto – 2.24

Frankfurt – 2.21

Zurich – 1.81

Munich – 1.80

Hong Kong – 1.71

Vancouver – 1.70

Amsterdam – 1.62

Tel Aviv – 1.59

Tokyo – 1.56


Miami – 1.39

Los Angeles – 1.31

Stockholm – 1.22

Paris – 1.21

Sydney – 1.19

Geneva – 1.14

London – 1.08

San Francisco – 0.78

Boston – 0.75

Madrid – 0.59

New York – 0.57

Singapore – 0.50


Milan – 0.34

Sao Paulo – 0.20

Dubai – 0.16

Warsaw – 0.15