Eldorado of expatriates, Dubai has experienced a real estate boom in recent months fueled by the influx of wealthy investors, Russians in particular, taking residents by surprise as rents explode.
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| Dubai Real Estate |
According to the authorities, the Gulf emirate achieved record transactions of over 132 billion euros in 2022, up more than 76% year-over-year, thanks to its gleaming towers, ultra-secure residences, and opulent man-made islands.
According to Faisal Durrani, director of search for Knight Frank in the Middle East, sales last year in the city's most affluent areas, where homes price more than ten million dollars, outpaced sales for the whole period 2010-2020.
It nevertheless remains "one of the most cheap," Mr. Durrani says.
While Dubai, the second city of the United Arab Emirates, is less oil-rich than its capital Abu Dhabi, it seduces visitors with favorable tax laws, a lavish lifestyle, and an abundance of services offered by hundreds of local businesses.
Dubai real estate attracts many wealthy Russians
Since last year, Dubai has drawn many affluent Russians who were fleeing Western sanctions due to the United Arab Emirates' apparent neutrality in the Ukrainian conflict.
Although the government won't reveal the nationality of investors, Betterhomes, one of Dubai's biggest real estate agents, thinks Russians were the top foreign purchasers last year. Among the top investors are also the French, Italians, Brits, and Indians.
Entrepreneurs, business executives, bankers, and celebrities are all scrambling to find somewhere to stay in this metropolis, one of the first to recover from the Covid-19 epidemic.
Dubai rents have soared by 20%
But, this real estate boom may not be good news for Dubai's 3.5 million expats, who make up over 90% of the city's population. According to Jacob Fletcher, a rental market analyst at Betterhomes, rentals have climbed by 20% on average in 2022, which is "extremely excellent for landlords, considerably less for renters."
Nonetheless, he claimed that long-term residents are the ones who are most negatively impacted by price increases. Although the market has already gone through several upheavals, particularly during the 2009 financial crisis or during the Covid-19 outbreak, the majority of them are used to seeing rents rise and fall along with the economy. Yet in a world of rising prices, the recent sharp increase in rents has forced many families to move.
The owner of our property issued us notice to vacate a year ago on the grounds that he wants to sell, claims a Western expat who has lived in Dubai for five years with her husband and children. In a nation where publicly airing one's displeasure is frowned upon by the government, the young woman who sought anonymity says, "But today the market is so wild, everything is so costly that we have to pay more for smaller and more distant lodging."
Social media is flooded with testimonies from families who are at odds with their owners and are trying to take advantage of the market's present pricing before things could change.
According to economist Faisal Durrani, who specifically mentions the global economic downturn and the increase in interest rates, Dubai "is not immune" to the current difficulties. Nonetheless, he adds, "The UAE, like Saudi Arabia, is among the fastest rising economies...and inflation levels there are lower than in the rest of the globe." "Thus, the future is more favorable than adverse."