The UAE’s real estate sector seems immune to the pull of gravity, both in the rise in prices and elevation, and suborbital space travel could send it even further beyond the stratosphere — but it could also have an inverse effect.
The success of the country’s property sector has been buoyed by its strategic location as a hub between East and West, but it could see that advantage diminish as distance becomes less of an issue. With suborbital space travel, one could fly from Dubai to Vancouver in the time it takes to drive to Abu Dhabi.
According to global property agency and consultancy Knight Frank’s The Wealth Report 2014, out today, more than 70 individuals with a combined wealth of $200 billion (Dh734.52 billion) — including business magnate Richard Branson — are investing in schemes to cut travel times, and in the process expand their property empires, Bloomberg reported.
“Investment in commercial space travel has become a big trend among the super-rich,” Khawar Khan, Middle East Research Manager for Knight Frank, told PW.
Liam Bailey, the firm’s Head of Residential Research and author of the report, told a financial publication over the weekend: “By travelling outside the Earth’s atmosphere, gravitational forces will allow spacecraft to travel at over 4,000 miles per hour.”
This will “shrink the globe in significant ways”, Khan said. “For example, we calculated the Dubai to Vancouver flight time would be reduced from 14 hours to 1.5 hours, opening up second-home markets to new UHNWIs from around the world.”
According to the report, reduced travel time could encourage investors from China and India to buy their second homes in Europe. This is sure to also have an effect on the UAE market.
The report favours London over New York as the global wealth hub because of its proximity to Africa, the Middle East, Europe and Russia, but the location premium could fall within a decade as space flights cut travel times.
That said, the industry is still in its infancy. Bailey acknowledged that there are “big challenges to overcome”.
“Ticket price will be critical. If this is a technology for billionaires only, then property market disruption might be limited to a wider choice of global lunch options,” the report stated.
There are currently about a dozen private companies engaged in space transport. Last month, Virgin Galactic said it is on track to carry its first fare-paying passenger to the edge of space later this year.
