Why the world’s super-rich are investing in Dubai real estate
In the City of Gold, the world’s wealthy show no sign of ending their real estate shopping spree
The past few years has seen an ever-increasing number of significant news stories related to record-breaking real estate sales for mind-boggling amounts of money. Case in point – March 2022 saw Indian billionaire Mukesh Ambani purchase a stunning mansion on Palm Jumeirah for $80 million.
But he wasn’t finished there, because in October of the same year the tycoon sealed a deal for another epic villa on the palm-shaped island. This time it was a 10-bedroom, 33,000 square foot, custom-built masterpiece for which he paid a whopping $163 million, making mere double-digit million prices for prime properties in Dubai seem almost inconsequential.
What’s interesting though is that investment at this level is not just a movement of the few. The list is long and illustrious, including the likes of UK-based billionaire Lakshmi Mittal and Chaopeng Zhang, the CEO and founder of Binance.
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Add in the crypto super-rich, hedge fund executives and Israeli investors (following the signing of the Abraham Accords), and it soon becomes clear that a millionaire/billionaire migration is headed straight for Dubai real estate.
The question is, why are the wealthy from around the world shopping for super luxury properties in Dubai and willing to pay record-breaking sums for it? Dubai is still very young in comparison to London, New York, Los Angeles and Hong Kong – global metropolises that offer some of the highest appreciation in property values. So why Dubai?
Brand Dubai: Attracting millionaires with prestige
The answer to that may lie in the “Brand Dubai” – the Dubai that has been marketed for its ease of doing business, upscale lifestyle, premium facilities and of course, luxury properties. The lure of Dubai for these investors can be best described in the words of the aforementioned Chaopeng Zhang, CEO and founder of Binance, who praised the city for its “progressive and good business environment”.
It could be said that the Brand Dubai is serving as a carefully strategised cure to the hurdles manufactured in the millionaires’ native lands and political systems. Take for example, the UK, which has the ‘Wealth Tax Commission’ sitting around thinking of ways to tax the wealthy. Australia has a 6 percent tax on net wealth for billionaires, whereas the US has a wealth tax of 2 percent on net assets above $50 million – the list goes on. It’s only fair for these HNWIs to seek greener pastures elsewhere.
While having a business-friendly ecosystem and excellent policy-making attributes contribute to an environment conducive to attracting foreign investment, it is only the tip of the iceberg. Brand Dubai, in all its glory, has a lot more to offer to millionaires across the globe, with good value for money being the most prominent of these offerings.
Dubai real estate: Unbeatable value and returns
For starters, the price per sq. ft. for ultra-luxury properties in Dubai is actually lower than one might think, especially when compared to other luxury cities in the world. A $1 million can get you a whopping 1,130 sq. ft. of luxury property in Dubai as opposed to just 183 sq. ft. in Monaco. Los Angeles may have more than its fair share of luxury hill top properties available for the millionaires, but in Dubai the same spend affords 170 percent more property. That is a serious upgrade!
To put things in perspective, here’s the size of property you can get in luxury cities across the globe, with $1 million:
- Monaco: 183 sq. ft.
- Hong Kong: 226 sq. ft.
- New York: 355 sq. ft.
- London and Singapore: 366 sq. ft.
- Geneva: 398 sq. ft.
- Los Angeles: 420 sq. ft.
- Dubai: 1,130 sq. ft.
While Dubai flexes a comparative advantage in value for money, that alone will not convince high net worth individuals to invest their money into the market. That’s where the average rental yields come into play. Most of the cities listed above offer rental yields between 2-3 percent, which is often much lower for luxury properties. On the contrary, rental yields average around 5-6 percent in luxury areas like Palm Jumeirah, Downtown Dubai and Dubai Hills Estate.
To sum it all up, the recent influx of millionaires in Dubai can be traced back to both intrinsic and extrinsic factors. In recent times, Dubai has become synonymous with stability – the economy is growing and the real estate sector is experiencing an unprecedented boom. This predictably resonates well with long-term investors. The fact that luxury properties in the city are way cheaper than other luxury cities around the world. The healthy rental yields are just the cherry on top.
Source: ArabianBusiness
Why Invest in Dubai?
Investing in Dubai can be an attractive option for several reasons, making it a popular choice among investors worldwide. Here are some key reasons why people consider investing in Dubai:
Strategic Location: Dubai’s geographical location makes it a hub for trade and commerce between Europe, Asia, and Africa. Its position as a global transit point and a gateway to the Middle East makes it an ideal location for businesses and investors looking to tap into international markets.
Thriving Economy: Dubai’s economy is diverse and robust, with various sectors like real estate, tourism, finance, technology, and logistics contributing to its growth. The government’s efforts to diversify the economy and reduce dependence on oil have led to a flourishing business environment.
Business-Friendly Environment: Dubai offers a business-friendly ecosystem with minimal bureaucracy, tax-free zones, and investor-friendly policies. There are no personal income taxes, and corporate taxes are relatively low, making it an appealing destination for entrepreneurs and businesses.
Infrastructure and Connectivity: Dubai boasts world-class infrastructure, including modern airports, extensive road networks, advanced telecommunications, and a state-of-the-art port. The city’s connectivity to major global destinations enhances its appeal for businesses and investors.
Real Estate Opportunities: Dubai’s property market has been a significant attraction for investors. The city’s skyline is dotted with iconic skyscrapers, and there are various residential and commercial properties available for investment. Additionally, Dubai offers freehold ownership in designated areas, making it accessible to foreign buyers.
Tourism and Hospitality: As a top tourist destination, Dubai attracts millions of visitors each year. The booming tourism industry has led to a high demand for hotels, serviced apartments, and vacation rentals, providing investment opportunities in the hospitality sector.
Safety and Security: Dubai is known for its safety and security, which is crucial for investors seeking stable and secure environments to park their funds.
Expo 2020: Although this event occurred in 2021, the Expo 2020 was a major milestone for Dubai, showcasing the city to the world and attracting significant investments. The legacy of Expo 2020 is expected to have a positive impact on various sectors in the coming years.
Lifestyle and Culture: Dubai’s cosmopolitan lifestyle, cultural diversity, and year-round pleasant weather make it an appealing place to live for many, adding to the demand for real estate and other businesses.
Despite these advantages, investing in any market carries risks. It’s essential to conduct thorough research, seek expert advice, and understand the legal and regulatory framework before making any investment decision.
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