After six years of decline, the Dubai real estate market is picking up steam with a rush of wealthy foreigners to this Gulf mirate that has become a major city. Escape from confinements and other health restrictions, thus revitalizing a convalescent economy. Luxury villas are in the forefront of purchases and many Europeans take their flight over Palm Jumeirah, an artificial palm-shaped island.
Despite the regular appearance of oversized houses and gigantic towers in the “skyline” of Dubai, one of the largest real estate markets in the region, until then, many properties could not find takers, the gloom reigning in the sector since 2014. The closure of borders due to the Covid-19 pandemic has affected sales halt, “but right after the lockdown we saw the volume of transactions increase. It hasn’t stopped since, ”says Zhann Zochinke, executive director of Dubai-based analysis firm Property Monitor.
In the first six months of 2020, the economy of the mirat has fallen by around 10%, according to official figures. The real estate sector (around 8% of GDP) recorded a decrease of 3.7%. The authorities have bet on a reopening to visitors from July 2020, promoted with a lot of influencers on social networks and coupled with strict health measures followed by … one of the most intense vaccination campaigns in the world.
Despite an explosion of cases after the Christmas holidays, life continued without too many restrictions in the mirat, with restaurants and hotels open. “Containment free-riders from other countries, we see a lot of them here,” Zochinke confirms, adding that it is easier to obtain resident status and possibility for foreigners to now own 100% of a business in Dubai also played. The influx of arrivals especially revived tourism and helped business return to pre-Covid levels in April, according to IHS Markit.
In the same month, the number of real estate transactions for properties worth more than 10 million dirhams (about 2.23 million euros) jumped to 90, according to Property Monitor, which usually records from 350 to 400 similar transactions per year. In April, 81 properties found buyers in Palm Jumeirah alone, up from a total of 54 in 2020. One particular hotel sold for almost $ 25 million. ??? euros, a record in recent years on the artificial island.
But will the increase recorded after confinement last? The market remains far from the records reached before 2014 and the apartment segment is lagging behind compared to luxury, leaving many towers half empty despite the frenzy of construction.
Morgan Stanley analysts are optimistic, however: “Robust demand, a spike in supply and lead times for new projects could strain the market more than expected over the next few years. esÂ ”.