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Soaring Apartment Prices in Dubai Spook Expats

CBRE Group, the American investment and commercial real estate services firm, reported that the last 12 months have seen a 20% rise in the cost of average apartments in Dubai through August 2023.

This is the largest hike to have been recorded in almost a decade. The report released by the CBRE Group showed that the apartment sales in Dubai are experiencing their highest period of growth since November 2014.

The numbers

In August 2023, the total number of transactions that were conducted in Dubai’s residential market stood at 11,328, which is the second highest monthly figure to ever be recorded.

This growth was led by off-plan sales, which refer to underdeveloped properties sold after being bought directly from the developer.

There was a 58.7% increase in the sale of such properties, while a 10.2% decline was recorded in the sales of existing properties.

The most transactions to have ever occurred in this period were seen in the year to date, as the total number of units bought and sold stood at 79,605.

Bloomberg reported that 85% of Dubai’s housing supply comprised of apartments. The real estate market of the emirate has seen a rebound after seeing a slump for seven years.

The rise

This is due to a stream of bankers who have relocated from Asia, crypto millionaires and Russians who are interested in protecting their assets while their country is at war with Ukraine.

This year, new highs were recorded in rents in Dubai, primarily due to the Russia-Ukraine war, along with the downturn in the global economy.

Not only did it cause prices of commodity and oil to rise, it also pushed up the number of Russians investing in Dubai.

CBRE said that there was a 20% rise in the average prices from August last year to this year and there was a 17.3% increase in villa prices.

According to the data from the real estate advisory group, the average annual rent for apartments has risen to $29,000, while that of villas has reached $87,835.

The market

Along with Turkey and Qatar, there has been major Russian investment in the real estate market of the United Arab Emirates, along with direct financial injections.

The luxury residential market in Dubai became the fourth most active one globally last year, which is the first time for it to have reached this position.

The total number of luxury home sales in Dubai surpassed $10 million last year, with New York City taking the top position with 244 sales.

The second and third position were taken up by Los Angeles and London with 225 and 223 sales, respectively.

But, middle income expatriate residents in Dubai may be priced out of the real estate market due to the amount of global wealth that is being injected into the emirate.

This trend has given rise to fears that Dubai could be altered due to an expat exodus and also affect the reputation of the UAE as a global business hub.

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