By MICKEY ALAM KHAN
There is a feeling that Dubai has returned to its feet.
Businesses, investors and residents will be reflecting what has been a tumultuous period in global history – of which Dubai was a notable casualty. Key indicators across tourism, employment and the wider economy took a turn for the worse as the world hit the pause button, and the city’s reliance on tourism and expat employment left it especially vulnerable.
The housing market, as is often the case during economic downturns, felt the repercussions of that. House prices nosedived and the luxury market buckled under the pressure as the world’s wealthy illustrated an understandable – and somewhat inevitable – reluctance to part with their capital. The postponement of the Expo was symbolic of Dubai’s retreat on the international stage.
But a short while later and with a world-beating vaccine programme in full swing (something which cannot be said for many other global hubs of affluence), the luxury market is in rebound mode.
Prime and super-prime sales are at highs not seen since 2011 and agents are reporting huge demand for villas and townhouses. Across the market as a whole, there were almost 5,800 transactions in August, the strongest recorded since the boom of 2013, up 30.1% monthly and 135.6% from August 2020.
It is worth noting that Dubai’s housing market is no stranger to volatility. Price fluctuations have become a defining characteristic of the last decade as an oversupply of new homes meant the boom years of 2013 -2015 proved unsustainable and were followed by a period of relatively modest growth.
It is perhaps little surprise, therefore, that Standard & Poor put caution to the wind this month by describing the recovery as fragile and uneven.
It is a claim which alludes to the inherently fractured nature of the Dubai housing market, one made up of many micro-markets and where performances vary heavily depending on location and stock type.
But there is reason to believe that the recovery, especially in the luxury space, will hold more longevity this time round. A number of underlying structural factors and global trends lend themselves to a robust long term outlook for Dubai.
One of those is the city’s growing reputation as a family-friendly destination. Dubai has long been a home for sole breadwinners of expat families, but we are beginning to see an increasing number of entire families make the move across on a permanent basis.
Luxury Portfolio’s agents on the ground, Bonne Apart Real Estate, part of the global network which markets over 50,000 prime homes annually, tell us that demand for family accommodation is responding as rental apartments are exchanged for larger and often prime family homes.
That hunt for greater square footage is also part of a wider global trend that has emerged out of the pandemic, something the U.K media has aptly name ‘the race for space’. Prime house-hunters scanning global luxury destinations are becoming increasingly cognisant of Dubai’s attractive prices relative to other hubs.
It will come as welcome news to Dubai’s policy makers, who are making a concerted effort to have internationals more invested in the social, economic and cultural fabric of the city. They seem set on challenging its reputation as a stop-gap solution driven by employment requirements.
Further evidence of that strategic approach can be seen in the relaxation of visa regulations. The Remote Work Visa, Green Visa and Freelancers Visa represent a welcome change from the restrictive conditions of the last few years. It ensures the very best in global talent, and the inward investment that follows, flocks to the shores of Dubai.
The 10-year Golden Visa programme will arguably be the most important of those and will play a pivotal role not only in real estate investment volumes but also in Dubai’s transition to a digitally driven, knowledge-based economy.
The city has also made significant progress with the way in which it is perceived on the world stage as policy makers adopt a more socially liberal face. The Expo is the perfect platform for Dubai to showcase those forward-thinking credentials and the colossal effort of its organisers illustrates their awareness of that.
Add to that an attractive financial backdrop, namely a cheap debt market and the unrivalled tax benefits for which Dubai is well known, and you have an extremely compelling proposition for the world’s wealthiest.
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