In times of crisis, Dubai has become an island of stability for rich people from different countries. According to Google Destinations Insight, Dubai is second only to London in popularity, ahead of Paris and New York. The UAE currency, the dirham, is pegged to the dollar and is stable.
An important advantage of Dubai has been its relatively affordable real estate compared to other financial centers such as London, New York, Paris, Hong Kong or Singapore.
In 2022, a square meter in Hong Kong cost an average of $25 thousand, in Singapore – $14 thousand, and in the UAE – $3.5 thousand. According to experts, the UAE real estate market has growth potential and in the future will be able to compete with the world’s largest megacities.
According to an anonymous billionaire, the super-rich are increasingly moving away from London’s housing market and towards Dubai in an effort to avoid high taxes. Thus, according to a Knight Frank report, the super-premium market in Dubai has grown by 44% over the past year. While New York’s growth was just 2.7%, London’s was 1.5%. However, London and New York continued to lead the world in the sale of luxury housing worth over $25 million.
Dubai is a city outside of politics; there is no discrimination based on nationality. However, the real magnet for business and investment in the UAE economy has been the absence of income taxes for individuals and companies exemption from corporate income tax. However, from June 2023, businesses are required to pay this tax at a rate of 9%.
Dubai is a place where finances flock from all over the world. This oasis for the super-rich values luxury and popularity so that celebrities can earn more than anywhere else. One of the recent examples of fabulous celebrity earnings was the private performance of the American pop singer Beyoncé for $24 million in January 2023 at the opening of the luxurious Atlantis the Royal Hotel in Dubai, the construction of which cost $1.5 billion.
Dubai, like any other city, has its drawbacks, which have recently become more pronounced. 90% of the metropolis consists of visiting foreigners. Since the beginning of the pandemic, migrants have been attracted by weak anti-Covid restrictions. High oil prices have also contributed to a 14-year high in the UAE, which reached 7.1% last year.
A surge in demand for housing from foreigners has triggered a rise in rents in Dubai. Thus, according to real estate agency CBE, by February 2023, rent for apartments in the city increased by 28% to almost 100 thousand dirhams (about $27.2 thousand).
The cost of apartments for sale has also increased and is about 1.2 thousand dirhams per square meter – the highest in 10 years. Some investors who bought homes at the start of the pandemic have sold them two years later for gains of 50% or more.
Despite its reputation as a modern Eldorado, salaries in Dubai have not kept pace with rising prices. The consulting firm Cooper Fitch estimates that wages in the city will rise by only 2% this year. The large number of rich and ultra-rich people is making Dubai an increasingly less affordable place for average-income workers. They are increasingly forced to leave the metropolis and look for more affordable areas in the UAE.