Foreign investors will keep Dubai’s property market’s boom going into 2023

Dubai: For Dubai and the UAE’s property market to sustain its 2022 momentum, those foreign investors need to keep on buying. Developers believe a repeat is in store in 2023, and putting their considerable resources into new launches, and not overly concerned about property market up-and-down cycles.

Through this year, a considerable inflow of funds into local property was from global investors homing in on UAE’s status as a safe haven. A place where investments can be secured in a secure operating environment.

The fourth quarter of 2022 offered more glimpses of such inward fund flow seeking just such an address, whether that’s at an Emaar project, a villa from Damac, a signature penthouse from Omniyat, snazzy water-side apartments from Sobha, or a community from MAG or Azizi. What mattered above all else was ‘Brand Dubai’ and Brand UAE’.

And that’s the ultimate address. In an interview, Gaurav Aidasani, founder and Managing Director of Union Square House, talks of this pull factor.

How much of it is a fact that Russian and CIS buyers are active in this market since March? If a fact, are these the Russian diaspora that is investing?

Even before the situation with Ukraine, Dubai has always been a favourite destination for Russian investors and tourists. Russians have always flocked to the emirate during winter to enjoy the weather and the beaches.

Since the pandemic started to subside early 2022, investors and homebuyers from Russia and the 11 other CIS countries have increased their purchase of real estate in Dubai. We have seen a spike in interest towards the end of Q1-2022, with demand growing about 50 per cent compared to the previous year.

With the decline in the ruble value earlier this year, Russians realized the importance of pegging their wealth to the dollar or assets abroad. This reinforced their preference of Dubai as an ideal investment destination, where they can hedge against currency devaluation and benefit from the continuous appreciation of the dollar.

The Palm has always been a top spot for Russian buyers – which are the other locations feeling the demand spike?

Waterfront properties have always been appealing to investors. Emaar Beachfront, Bluewaters, Bvlgari Island, Marina and La Mer are some of the areas that Russian buyers are interested in.

Several developers in Dubai have started creating lagoons and artificial beaches in the middle of large villa communities, which have been met with high demand from Russian investors. In fact, waterfront living in the middle of the desert is trending among investors of all nationalities.

Is the preference for ready homes? And are all these being transacted with ready cash?

The demand for ready homes is definitely up. At the same time, that for offplan real estate is also the highest it has been in the past few years due to flexible payment plans. Ready homes on the secondary market are transacted in cash, but those from developer are often sold through payment plans since it is very tough for non-residents to secure mortgages.

Given the restrictions, aren’t these buyers having difficulty mobilizing their money to buy property?

Many Russian investors in Dubai have had some of their capital in other countries. Others have invested heavily in cryptocurrencies, which may be less liquid than other asset classes. But they could turn it into cashflow hassle-free. Also, a lot of Russian investors had already transferred money out of Russia at the outset of the war, when banking channels were still open.

How should an overseas investor structure a property buy here? Should they opt for ready or offplan?

Both ready and off-plan properties have their respective pros. It all depends on the customer’s needs and whether a buyer is looking for a place to live, use for holiday, rent out or resell. Someone seeking immediate returns would be more interested in ready properties.

Are developers in Dubai launching special promotions targeting these buyers?

In terms of demand, the Dubai market is currently at its best. Nearly no promotions are needed in order to sell. In fact, there is a shortage of staff, and demand continues to exceed supply especially in the premium and luxury category.

Are developers demanding a sizeable upfront payment, because of their worry about defaults and the restrictions on transfers?

Dubai is a very well-regulated market and there are clear laws that protect customers as well as developers. Hefty down payments driven by the fear of defaulting on further payments isn’t a priority for developers in an upmarket environment such as the one we are in right now. Such caution is more likely to be taken during a market downturn.

Are you starting to see a drop in CIS buyers since October?

We haven’t seen a drop in these buyers this year. What we are now witnessing is an increase in European buyers. According to the latest data, European buyers now represent the number one group of investors in Dubai, followed by Russians.