Wealthy foreigners flock to these properties in the Gulf emirate, which has become an escape from health restrictions.
After six years of decline, Dubai’s real estate market is picking up steam. Luxury villas, if possible with a golf course, are the first to buy and many Europeans set their sights on Palm Jumeirah, an artificial island in the shape of a palm tree (see our slide show in the main illustration). 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, many properties have not found buyers until now, the gloom reigning in the sector since 2014.
The closure of borders due to the Covid-19 pandemic brought sales to a halt, but “right after containment we saw the volume of transactions increase. It hasn’t stopped since, ”says Zhann Zochinke, executive director of Dubai-based analysis firm Property Monitor.
The authorities have bet on a reopening to visitors in 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. The influx of arrivals especially boosted tourism and helped business return to a pre-Covid level 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 typically records 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 mansion was sold for nearly 25 million euros, a record in recent years on the man-made island.
Villa seeks buyer for 22 million euros
Now the first gem on the market, a modern villa of 1309 square meters in Italian style, 60-meter beach, white marble, infinity pool and home cinema, located at the end of a palm leaf, is still looking for a taker for 22 millions of euros. “I think people are starting to realize that Dubai is no longer a construction site, as it was ten years ago when the city held the world record for cranes,” said Matthew Bate, boss of BlackBrick, a agencies trying to sell the property. According to him, buyers now establish their primary residence there, while continuing to manage their business remotely in Europe, North America or Asia.
But will the increase recorded after confinement continue ?
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 however optimistic: “robust demand, a peak in supply and delivery times for new projects could strain the market more than expected in the coming years.” According to a recent report by the American investment bank, with “a wave of government reforms, attractive real estate rates and a change in the structure of demand due to Covid-19”, the stars are aligned for the emirate tinsel to continue to shine.