Dubai’s Real Estate Appeal to Wealthy Clients: Economic Strengths

6:34 pm  |  22.01.2024

A steady flow of wealthy clients ensures high demand for real estate in Dubai, especially in the prestigious segment. The reasons for Dubai’s attractiveness are numerous. Firstly, the country is the world’s largest transport hub for global imports and exports, from Europe to Asia. The ideal location in the region ensures efficient and profitable planning of logistics flows. You can cross two-thirds of the planet in eight hours by plane from the Emirates, and the country has some of the busiest shipping and airports in the world.

Secondly, regional financial markets such as the Dubai and Abu Dhabi stock exchanges are showing positive results, and companies in the region are actively profiting and expanding. Reforms in Dubai are aimed at supporting the economy and developing the private sector, such as changing the law on foreign ownership and business development for foreigners.

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Third, new IPOs motivate investors. For example, the IPO of the Dubai Electricity and Water Supply Company raised Dh22.3 billion and became the largest in Europe and the Middle East over the past two years. This is largely due to the country’s overall GDP growth, macroeconomic factors, and high liquidity in the UAE market.

The IPO of the Dubai Electricity and Water Supply Company raised Dh22.3 billion and became the largest in Europe and the Middle East.

Economic Optimism and Diversification Efforts

The overall optimism in the region’s economy is based on efforts to move away from oil dependence and a focus on investment in key projects: the metro expansion, Master Plan 2040, and other projects for sustainable development of the UAE. Against the backdrop of difficult times in Europe – historically high inflation, low economic growth, and high unemployment – investment opportunities in Arab countries are increasing.

Real Estate Stability and Investment Opportunities

Among investment options in Dubai, real estate is considered one of the most stable. The sector remains a safe haven from inflation, offering low-risk and stable returns. The construction of high-quality real estate, a limited number of premium locations, and the excess of demand over supply led to market growth. Not only Russians but also investors from India and the UK are traditionally among the top 3 buyers of real estate in Dubai. The variety of properties provides a wide choice for potential investors, including both luxury villas and ready-to-move-in mid-range projects, such as those presented by Driven Properties.

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Foreign Investment Trends and Expectations

The first half of this year was marked by a significant increase in investment in Dubai real estate by foreign investors. In the third quarter, there was a correction associated with non-seasonal factors, but already in the fourth quarter, there was a moderate increase associated with the start of the season. Europeans and Americans showed interest in Dubai properties, and investors from the CIS countries living abroad not only did not reduce but even moderately increased demand. After the lifting of Covid restrictions in China, the demand for Dubai real estate has increased several times. In 2024, demand is expected to stabilize and consolidate at an average level.

The Dubai market has long proven that it is not a bubble. After the change in Swiss policy, many businessmen began to transfer capital to Dubai, considering this region to be more reliable. This is confirmed by data from the UBS Global Real Estate Bubble Index, which reflects real estate bubbles. Dubai remains in the green as one of the most undervalued markets in the world, approximately 20-25% below its fair value by Q4 2022.

Economic Stability, Real Estate Affordability, and Currency Strength

Dubai is also known for its affordable real estate compared to other metropolises in the world. The UAE ranks second in economic stability after Switzerland and Canada, and real estate investments pay off here faster than in other countries. Dubai is ranked in the top 15 best places for a technology career.

An important factor in the attractiveness of the region for international investors is the high level and quality of medical services. The government is actively building modern hospitals, introducing international standards, developing telemedicine, and attracting investments in healthcare and qualified specialists from abroad. The average life expectancy in the country is 80 years, which is only four years less than in traditional leading countries in this indicator, such as Switzerland and Japan.

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Future Growth and Development Plans

In the long term, the emirate plans to become an even more influential player on the world stage. Al Maktoum, becoming the largest in the world, as well as the Master Plan 2040, which provides for an increase in the length of the coastline by 400% and an expansion of land for the construction of tourism facilities by 134%, indicates a desire for continuous development and growth. We should not forget the growing influence of other emirates such as Abu Dhabi and Ras al-Khaimah.

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