Dubai, United Arab Emirates: As “lockdown dodgers” and wealthy international investors drive a buying frenzy that is breaking records and fueling an economic rebound, Dubai’s property market is roaring out of a six-year slump.
Luxury villas are the most popular type of property in Dubai, with European purchasers, in particular, looking for properties on the Palm Jumeirah man-made island and golf course estates.
According to Zhann Zochinke, chief operating officer of consultancy Property Monitor, Dubai’s rollercoaster property market, which has been in gradual decline since 2014, hit a halt last year once Covid-19 struck and the emirate closed its borders.
“Then straight after that lockdown period we started to see transaction volumes increase, and they really haven’t stopped since,” he told AFP.
“We’re now seeing record month-on-month gains and transaction volumes.”
Last July, the Gulf emirate became one of the first destinations to reopen to visitors, combining an open-door policy with stringent rules on masking and social distance, as well as a vigorous vaccination program that has resulted in amongst of the world’s highest inoculation rates.
Despite a spike in coronavirus infections in the new year as visitors descended in droves, life has virtually returned to normal, with restaurants and hotels operating and few of the restrictions that have plagued other parts of the country.
“The lockdown dodgers from other countries? I think we’re seeing a lot of that there,” Zochinke said, adding that other draws were more relaxed residency rules and a decision to allow full foreign ownership of firms.
‘It’s not just a building site’
According to IHS Markit, the influx of visitors has helped Dubai’s tourism industry, which has long been an economic staple despite the fact that it lacks the oil wealth of its neighbors, rebound to pre-Covid levels in April.
“Travel and tourism firms recorded the most notable bounce in performance, amid increasing hopes of a rise in tourism activity later in the year, boosted by the rapid vaccine roll-out,” said the research firm’s economist David Owen.
According to Property Monitor, after years of dormancy in which homeowners watched their equity erode, the spike in luxury houses above 10 million dirhams ($2.7 million) has been noticeable, with 90 transactions in April compared to roughly 350-400 on a usual yearly basis.
Property on the Palm has sold for 111.25 million dirhams, the highest price in the precinct’s 16 “fronds,” which are lined with show-stopping homes and supercars parked in driveways, in years.
A massive Italian-inspired modern mansion positioned at the end of one of the fronds, replete with 180-degree beach frontage, is being auctioned for 100 million dirhams, making it the most expensive property on the block.
The developers are hoping that one of the new species of cashed-up Europeans will be enticed by the infinity pool, private cinema, and acres of marble and glass after it lingered on the market during the dismal days at the height of the pandemic.
“I think people have started to realize that Dubai is not just a construction site anymore, which it was maybe 10 years ago when we had the most amount of cranes in the world,” said Matthew Bate, CEO of BlackBrick, one of the agencies representing the property.
‘Covid flung open the doors’
“People are now looking at Dubai and saying — I’m going to make this my primary home. I can work from Dubai and still manage a business in Europe or North America or Asia,” he said.
“So I think what Covid ultimately did, it opened the doors for us to the rest of the world.”
There is concern that the recent exuberant advances can be sustained in a market where many fortunes have been made and squandered.
According to Property Monitor, sales of homes worth more than 10 million dirhams increased by 6.7 percent in April compared to the previous month, with 81 villas sold on the Palm in April alone, compared to 54 in all of 2020.
Despite the impressive improvements, the market is still well behind its 2014 highs, and the apartment market is lagging far behind.
However, Morgan Stanley, a financial services firm, has stated in research that the surge is unlikely to end very soon.
“Robust demand, peaking supply growth, and long lead times for new projects could lead to a tighter-than-expected market over the next several years,” it said.
It credited “a wave of government reforms over the past 12 months, attractive mortgage rates, and a shift in demand patterns due to Covid-19”.