Arab News, Sunday, May 30, 2021 | Shawwal 18, 1442
Dubai property booms as wealthy buyers escape lockdowns
Emirates: Dubai’s
property market is powering out of a six-year malaise as “lockdown dodgers” and
wealthy international investors drive a buying frenzy that is breaking records
and fueling an economic recovery.
Luxury villas are the hottest segment in the market, with European buyers in
particular seeking homes on Dubai’s signature Palm Jumeirah man-made island, as
well as golf course estates.
Dubai’s rollercoaster property market, which had been in steady decline since
2014, went into flatline after Covid-19 hit last year and the emirate slammed
shut its borders, said Zhann Zochinke, chief operating officer of consultancy
Property Monitor.
“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.”
The Gulf emirate became one of the first destinations to reopen to visitors last
July, pairing the open-door policy with strict rules on masking and social
distancing, and an energetic vaccination program which has produced some of the
highest inoculation rates globally.
Despite a surge in coronavirus cases in the new year after holidaymakers
descended en masse, life has continued largely as normal with restaurants and
hotels open, and few of the restrictions that have blighted life elsewhere.
“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.
The flood of arrivals has regenerated the tourism industry, long an economic
mainstay of Dubai which has little of the oil wealth that powers its neighbors,
and helped business activity recover to pre-Covid levels in April, according to
IHS Markit.
“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.
After years of torpor when homeowners watched their equity drain away, the surge
in luxury properties above 10 million dirhams ($2.7 million) has been striking,
with 90 transactions in April compared to around 350-400 on a regular yearly
basis, according to Property Monitor.
A mansion on the Palm has sold for 111.25 million dirhams, the highest price
reached in years in the precinct which features 16 “fronds” lined with
show-stopping houses and supercars parked in the driveways.
The highest-priced property now available on the block is a vast
Italian-inspired modern villa positioned at the end of one of the fronds,
complete with 180 degree beach frontage, which is being offered for 100 million
dirhams.
After it languished on the market during the gloomy days at the height of the
pandemic, the developers are hoping that one of the new breed of cashed-up
Europeans will be tempted by the infinity pool, private cinema, and acres of
marble and glass.
“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.
“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 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.”
In a market where many fortunes have been made and lost, there is nervousness
about whether the recent giddy rises can be sustained.
Sales of properties above 10 million dirhams rose 6.7 percent in April compared
to the previous month, and 81 villas were sold on the Palm in April alone
compared to 54 in all of 2020, according to Property Monitor.
Even with the remarkable gains, the market is still off its highs of 2014, and
the apartment market is trailing far behind.
The financial services firm Morgan Stanley, however, said in a recent report
that the rally isn’t likely to stop 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.”