The Dubai property market has experienced a remarkable surge in prices, largely attributed to a significant influx of Russian and European investors. These investors are flocking to Dubai, increasingly drawn to the emirate’s real estate sector, seeking stable markets and the promise of a luxurious lifestyle.
Dubai, a city already bustling with expatriates, with nearly 90 per cent of its approximately 10 million inhabitants being foreign nationals, was taken by storm when a wave of Russian investors arrived in 2022. Russian billionaire investments played a pivotal role in driving a staggering 47 per cent increase in property prices.
By early 2022, Dubai witnessed one of its most prosperous real estate markets in years. According to the Dubai Land Department, the sector saw a remarkable 45 per cent year-on-year increase in sales in April 2022, followed by a 51 per cent surge in May.
Last year, Dubai recorded over 86,000 residential sales transactions, surpassing the previous high of 80,000 in 2009. Moreover, property sales in 2022 amounted to a staggering $56.6 billion, representing an over 80 per cent increase compared to 2021.
This surge in sales was significantly facilitated by real estate companies and brokers, with Realiste, a prop-tech AI company offering real estate solutions in 51 global cities, playing a pivotal role.
Speaking to Khaleej Times, Alex Galt, founder of Realiste, emphasized the importance of investor vigilance, advising: “Investors should conduct thorough market research, assess the risks, and consider diversifying their portfolios to mitigate any potential negative impacts in the future.”
The Russian investors, facing Western restrictions on several Russian banks, encountered difficulties in opening bank accounts and transferring money to the UAE. As a response, the UAE Central Bank granted Russia’s MTS bank a license to operate in February 2022, offering Russian investors some financial flexibility.
Paragon Properties co-founder Angelo Kazantzas explained that the lucrative returns in the Dubai real estate market, coupled with the stability offered by investing in the UAE created a highly attractive value proposition for those looking for opportunities.
“The massive property growth in the UAE, especially Dubai and increasingly in Ras Al Khaimah, as well as the ease of doing business, driven largely by the emirates’ flexibility and willingness to accommodate varying needs, make it an extremely attractive investor market.
European and Russian investors have recognised this and are grabbing the opportunity with both hands,” said Kazantzas.
As the initial Russian wave of investment subsidies, European investors are emerging as the primary replacement in the Dubai real estate market, occupying approximately 30 per cent of the market share. Indian investors rank second with around 20 per cent market share.
This shift underscores the dynamism of the real estate market, with investor preferences evolving over time.
European property buyers, particularly those from Western European countries like Switzerland, Germany, France, and the UK, have become increasingly attracted to Dubai. They are enticed by more favourable rates and the impact of the Ukraine crisis on the European economy.
These European investors are capitalizing on Dubai’s higher returns in terms of rentals and capital appreciation. The emirate’s real estate market has maintained attractive prices with yields of up to 8 per cent, a significant advantage over most European countries.
Najmeh Jafari, General Manager of Samana Developers, highlighted that the factors driving European investors include low tax rates, a luxurious and appealing lifestyle, competitive property prices, ease of doing business, political and economic stability, and safety.
All these factors make Dubai an enticing destination for European investors looking to purchase property and establish businesses.
Property finance expert Micael McPhearson, President of ProPropFin International, underscored the UAE’s economic stability compared to the global landscape and other incentives for European investors.
“The real estate market in the UAE has succeeded in sustaining appealing property prices while delivering higher yields per unit compared to many European nations.
“Presently, investors can potentially enjoy returns of up to 8 percent, a significantly superior figure when contrasted with the offerings of European countries,” McPhearson noted.
In addition to favourable returns, European investors are drawn by the allure of the Golden Visa program, full ownership rights, business opportunities, and other incentives.
Flocking to Dubai
Dubai’s real estate market continues to evolve, with Europeans making a significant impact and diversifying the investor landscape.