DUBAI, United Arab Emirates — Dubai’s real estate sector continues to go from strength to strength as growth and reforms in the oil-rich Arab Gulf states attract more residents, businesses and foreign investors.
Year-to-date real estate transactions in Dubai hit an all-time high at the end of 2022, surpassing previous records reached during the same period of 2009, according to CBRE. The rise can be partly attributed to the geopolitical crisis, which has benefited Dubai and the United Arab Emirates.
“Dubai is a hub, and Dubai has benefited from the Iran-Iraq war, the Kuwait-Iraq war, [the] US-Iraq war, since the Arab Spring,” Hussain Sajwani, chairman of Damac, one of the UAE’s largest private developers, told CNBC’s Hadley Gamble at the World Economic Forum in Davos. .”
Within weeks of Moscow’s full-scale invasion of Ukraine, waves of Russian nationals came to Dubai to reside and invest their money in real estate, where it would be protected from Western sanctions. Several real estate professionals in the glitzy and touristy emirates told CNBC that Russian parties accounted for the highest proportion of transactions by nationality over the past year among their clientele. Sajwani estimated that Russian nationals make up around 15% of his clientele.
Dubai already knew its hottest real estate market for years in the early months of the war. Sales in the sector were up 45% year-on-year in April 2022 and 51% in May, according to the Dubai Land Department.
The swimming pool of a luxury villa for sale in Palm Jumeirah in Dubai, May 19, 2021.
GIUSEPPE CACACE | AFP via Getty Images
Economic turmoil in other major cities is also contributing to Dubai’s growing popularity, Sajwani said. “Dubai has benefited from higher taxes in Europe, [and from] lack of security in London, Paris and other European cities.”
Dubai is the commercial and leisure capital of the United Arab Emirates, with an expat population of around 90% and zero income tax. It has been ranked among the safest cities in the world for years, largely due to highly restrictive laws and a system of capital punishment criticized by many human rights groups.
Sajwani believes the cost of living in Dubai and the city’s property market will continue to climb.
“Dubai is getting expensive, and it will be even more expensive. It is a reality, because [when] you have a lot of rich people in big companies, the demand is growing,” he said.
Many residents have complained about rental prices rising 50% or more year over year, with some seeking to downsize for more affordable housing. When asked if people would be deported from Dubai, Sajwani replied: “No, I don’t think so.”
While he acknowledges the positive impact that foreign conflicts have sometimes had on the UAE’s economy, the real estate mogul is still well aware of the risks of real danger to the country.
“Regional conflicts, for God’s sake, if there is a major war like what happened between Iraq and Iran, if we have a major war between Iran and Israel, the ‘America or whatever…it will impact the country,’ he said. said.