20 August 2023, Khaleej Times
A major factor in the surge in Dubai’s property prices has been a huge influx of Russian investors into the sector, data shows.
The UAE, especially Dubai, has been an attractive destination for wealthy investors and businessmen from across the globe for years now. These people of great wealth come to Dubai looking for the famed stable market and a life of luxury.
While Dubai is already brimming with and accustomed to expats where nearly 90 per cent of the UAE’s roughly 10 million inhabitants are foreign nationals, the Russian wave that came into the UAE in 2022 took the city by storm.
The Dubai real estate market remained relatively stable until Russian billionaire investments in real estate led to a 47 per cent increase in property costs, data shows.
Within the first few months of 2022, Dubai had its most prosperous real estate market in years. According to the Dubai Land Department, sales in the sector increased by 45 per cent year on year in April 2022 and 51 per cent in May.
In 2022, Dubai recorded more than 86,000 residential sales transactions, breaking the previous high of 80,000 in 2009. Additionally, $56.6 billion in property was sold in 2022, over 80 per cent more than in 2021.
Such sales were greatly facilitated by real estate companies and brokers especially Realiste, a prop-tech AI company providing real estate solutions in 51 cities worldwide.
Alex Galt, founder of Realiste, stated: “I would likely advise investors to carefully monitor the current situation in the Dubai real estate market. While it has experienced a period of prosperity due to Russian investments, there are potential challenges ahead, such as soaring rent and property prices. Investors should conduct thorough market research, assess the risks, and consider diversifying their portfolios to mitigate any potential negative impacts in the future.”
Due to Western restrictions on several Russian banks, Russian nationals have had difficulty opening bank accounts and sending money to the UAE. Hence, the UAE Central Bank granted Russia’s MTS bank a licence to begin operations in February 2022, enabling Russian investors to have some financial breathing room.
As the Russian wave of investment subsides, European investors are emerging as the primary replacement for Russian investors in the Dubai real estate market. They now occupy about 30 per cent of the market. Indian investors rank second with around 20 per cent market share. As for the third place, it is unlikely that the Chinese will remain there towards the end of the year, Realiste data shows. “The real estate market is dynamic, and investor preferences can change, so it’s essential to monitor ongoing trends,” said Galt.