Rising number of super-rich residents boosting relatively low UAE property pricesPosted on 07 March 2013 with 1 comment from readers
Real estate agent Knight Frank has issued a report forecasting that the number of ultra high net worth people living in the UAE will rise from 828 to 1,270 over the next decade. That’s a guess. We have no such data available in the UAE, and if anything it probably understates the true position.
More interesting was the finding that Dubai was ranked the seventh-best city in the world by the super-rich last year, with London topping the list. Dubai scores best for its zero tax regime. It also has some of the cheapest luxury property in the world.
The report said $1 million will buy you 168 square metres of luxury housing in Dubai compared with just 16 square metres in Monaco, 23 square metres in London and 44 square metres in New York. Sell up in Monaco and you could buy a mansion ten-times the size in Dubai.
Overtime such price differentials lead to price arbitrage in favor of the cheaper destination, other things being equal, and Dubai’s zero tax regime is also a major pull at a time when global taxation is on the increase and targeting the more advantaged.
That’s why owners of property in The Meadows, a villa community in New Dubai popular with new arrivals get constant SMS messages from estate agents desperate to find propery for their clients. Only cash buyers prepared to pay large premiums are getting the sort of villa they want these days.
Emaar Properties has also had sell-out launches in its Downtown district for its Address serviced apartment towers recently. These particular homes appeal to the Saudi shopping elite with their proximity to the Dubai Mall.
Villa prices surge
Last year Dubai villas showed the third-highest residential property price increase in the world at 20 per cent. How long can this continue?
It is unlikely to be a continous uptrend. The UAE Central Bank’s mortgage loan-to-value statement at the start of 2013 caused a brief hiatus though that now appears to have been kicked into the long grass by the authorities and the market is pulling up again.
To local residents the price of Dubai property may appear high in comparison to recent experience but to the global rich its an international bargain waiting to be snapped up. Dubai is an international hub city without the house prices of such a city, and a wide-range of spacious, luxury properties. Go figure where the rich will put their money now.