Excitement in the Dubai Real Estate Market
The UAE real estate market for several years hasn't been given any optimistic signals: prices were falling, sales declined... The crisis that followed the beginning of the pandemic was supposed to increase the number of difficulties. For example, the World Exhibition Expo-2020 was postponed for a year and a half. However, the opposite news has come from the Emirates: prices and sales have started to grow, and the pace is accelerating. What is going on in the Middle East state? We discuss it with Nikita Kuznetsov, the CEO of Metropolitan Premium Properties in Dubai.
Big sales
There is a real boom in sales in the secondary market right now with the highest volumes. Dubai's Land Department is barely managing the deals.
The demand for luxury real estate has increased sharply, due to the mass relocation of businessmen to Dubai and the transfer of their holding companies to the financial zone of the Dubai International Financial Center (DIFC). The most expensive villa in Dubai was sold this year for $29.4 million.
Agencies and realtors are on the rise now. Everyone we talked to had at least a twofold increase in sales compared to the first quarter of 2019, and some had even a three- and fourfold increase. Top real estate agents now sell property for $15-20 million per month, in our company, one of the leading brokers got sales for $55 million.
Whole floors are being sold even before the start of sales. The main buyers come from the CIS and Europe, and many residents of the UAE are also Indians, Pakistanis, British, and Arabs.
People come to stay
Transactions are very active, but there is still a huge demand. While some of the customers are not ready to buy, they arrive in the emirate for the first time and simply want to peer. People travel from the most expensive places in Europe: Monaco, London, Marbella… Even from Switzerland. Many of those who postponed the purchase, finally make the final decision now. Many people move their families to Dubai and expect their children to go to school here from September.
How did Dubai make it?
The main reason for the increased interest of foreigners in Dubai is the calmer environment during the pandemic. The emirate experienced one serious lockdown (spring-early summer 2020), after which life began to gradually return to normal. At the beginning of 2021, new restrictions were introduced for a while, which mainly affected the working hours of catering establishments, swimming pools, etc. However, these measures cannot be compared to the hard lockdown at the same time in Europe.
As of the end of April, the UAE is the leader in the proportion of the vaccinated population. More than 7 million local residents have already been vaccinated.
Now cafes and restaurants are working as usual, hotels are packed for the spring holidays, prices for accommodation are at their peak, air tickets have doubled in price. This is one of the few open countries, so people from all over the world go on vacation to Dubai. The Emirate is regarded as a safe haven where sports competitions are transferred. From the fall of 2021 to the spring of 2022, the Expo-2020 exhibition should finally take place.
However, it is not just about successfully fighting with the pandemic. Over the past two years, the Emirates has made a number of changes to the immigration rules: five-year and ten-year "golden visas" for investors and talented individuals, a visa for pensioners, a residence permit for digital nomads. As a result, foreigners were attracted to the Emirates, began to buy or rent housing.
The citizenship program is currently under consideration. It is expected that outstanding specialists and artists, as well as major investors, will receive passports. There are foreigners who've invested $20-30 million in local real estate and expect to receive an Emirati passport in the foreseeable future.
And that's not it: Dubai authorities have recently adopted the Urban Master Plan 2040, which involves intensive construction and billions of dollars in investment. As a result of the investment, the coastline will increase by 400%, new islands and projects with private beaches will appear in the emirate. More than half of the territory will turn green. Special emphasis is placed on educational and medical institutions, as well as on hotels and other tourist facilities. This is the way the authorities try to create an attractive environment for local residents and visiting foreigners. They expect that people will remain in the emirate. Due to this, it is planned that the population of Dubai will increase from the current 3.3 million to 6 million people.
Real estate shortage
Against the background of the excitement that has arisen in Dubai, the seller's market has reformed. The owners decide how much they want to earn and assign bonuses from the sale at their discretion. Some of our investors exit the deal with a profit of 50-60%.
The main problem in the market is that the supply is limited. All the cheap housing was quickly sold out, many owners withdrew from the sale of objects or raised prices much higher than the market. Due to the sanitary measures taken last year and the decline in demand, developers significantly slowed down the pace, there were few new projects, and now there is a shortage of them. In fact, the developers have sold almost everything, both under construction and ready-made housing, so we are looking forward to launching new projects.
Today, everything is sold in Dubai, even what has been on the market for years.