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WHY THERE WON'T BE A BUBBLE IN THE REAL ESTATE MARKET IN DUBAI?"

Price bubbles are a frequent phenomenon in the real estate market. The term "bubble" refers to a substantial and sustained overvaluation of an asset whose existence cannot be proven until it bursts. However, historical data show a pattern of excesses in the real estate market
The UBS Global Real Estate Bubble Index tracks the fundamental valuation of housing markets and cities in relation to both their country and economic distortions (credit and construction booms)
Tracking current values, the index uses the following risk-based classifications:
  1. depressed (score below -1.5)
  2. undervalued (-1.5 to -0.5)
  3. fair (-0.5 to 0.5)
  4. overvalued (0.5 to 1.5)
  5. bubbles. risky (above 1.5)
This classification corresponds to historical episodes of the bubble
The index score is a weighted average of the following five standardized city sub-indices:
  1. price-income and price-rent (fundamental valuation)
  2. change in the ratio of mortgages to GDP and change in the ratio of construction to GDP (economic distortion)
  3. indicator of relative price by city and country. The price indicator between cities and countries in Singapore, Hong Kong and Dubai has been replaced by an inflation-adjusted price index
Based on such models, the UBS Global Real Estate Bubble Index assesses the risk of a real estate bubble:
UBS Global Real Estate Bubble Index rankings for housing markets in select cities, 2022
Note that Dubai is the penultimate line in these statistics, indicating the minimal risk of a real estate bubble in Dubai
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