Reviewing the Impact of Liquidity on Real Estate: An International Comparative Study

Abstract

After battling significant losses due to the global financial crisis of 2008 and the COVID-19 pandemic, the UAE real estate market has seen new highs in 2021 and 2022. The uptrend of this sector is likely to continue into the next few years, with the money of foreign investors pouring in and the persistent increase in oil prices. Innovative policies and initiatives have made the UAE a haven for investors while Europe and some other countries deal with a liquidity crunch. As per our observations, property purchase in the UAE seems to be a very sound long-term investment, which is probably one of the safest in the uncertain world we are living in today. This paper aims to study how liquidity affects the performance of the real estate market in the UAE and other countries. The findings reveal that the UAE is an ideal real estate investment destination in times when many countries are facing tightening financial conditions, with some on the brink of deep economic crisis. UAE Government policies like the Golden Visa Scheme and zero property taxation welcome more expats to invest in UAE properties and settle in the country. Foreigners are attracted by the country’s sound capital markets, excellent infrastructure, economic stability, and perceived absence of systemic corruption. The credit fundamentals of UAE banks are strong for the coming years, with high oil prices supporting liquidity. The findings also suggest that Dubai real estate will continue to thrive despite the fear of global recession. However, investors should be prepared for a possible increase in property prices and annual rents in the coming years as the UAE real estate market continues its upward trajectory in line with the rising oil prices and foreign direct investments.