Luxury mansions in Dubai, a market that has grown among wealthy foreigners to avoid lockdowns

After six months of decline, the real estate market of Dubai recovers, thanks to many rich foreigners who find in this Gulf emirate a way out of confinements and other restrictive health measures, thus revitalizing a recovering economy.

Luxury villas -some with a golf course- are the most coveted, and many Europeans are looking to Palm Jumeirá, an artificial island in the shape of a palm tree.

Despite the frequent appearance of large houses and colossal towers on the “skyline” of Dubai, one of the largest real estate markets in the region, many properties could not find a buyer. The sector had been having problems since 2014.

The closure of borders due to covid-19 crippled transactions, “but shortly after the lockdowns we found a increase sales, and it has not stopped since ”, explains Zhann Zoshinke, director of the real estate analysis firm, specialist in Dubai.

Tourism and economy

Contrary to what is happening in other Gulf countries, the economy of Dubai, one of the seven United Arab Emirates, is no longer based on oil but on tourism, commerce, finance and real estate, which represented in 2019 a little more than 7% of its GDP.

In the first half of 2020, the emirate’s economy fell by around 10%, according to official figures. The real estate sector (around 8% of GDP) recorded a drop of 3.7%.

The authorities are betting on a reopening to tourists in July 2020, with strict sanitary measures, including one of the largest vaccination campaigns in the world.

Despite an increase in the number of cases after the Christmas holidays, life in the emirate continued without major restrictions, with restaurants and hotels open.

“We see here many escaped imprisonment in other countries, ”Zoshinke confirms, adding that it is now easier to obtain residency and that foreigners can own 100% of a business in Dubai.

The flow of strangers drove the tourism in particular, bringing companies back to their pre-covid level in April, according to IHS Markit.

Properties, buyers and construction

That same month, real estate transactions of properties for amounts greater than 10 million dirhams (about 2.72 million dollars) reached 90, according to Property Monitor, which records annually between 350 and 400 sales for these amounts.

In April, there were 81 buyers in Palm Jumeirá, against 54 in 2020. A mansion was sold for nearly $ 30 million, a record in recent years on the artificial island.

Currently, the jewel of the market is a modern villa of 1309 square meters of Italian style -60 meters of beach, white marble, huge swimming pool and cinema included- located at the end of one of the palm leaves. Price: $ 26 million.

“I think people see Dubai is no longer a construction site, like ten years ago, when I owned the crane world recordSaid Matthew Bate, director of BlackBrick, the agency that sells this property.

Explain that buyers now they are repairing their residence here and remotely manage their businesses in Europe, North America or Asia.

But will this increase continue after the lockdown?

The market is far from pre-2014 records and the apartment sector lags behind luxury mansions, leaving many half-empty towers despite the frenzy of construction.

However, Morgan Stanley analysts are optimistic: “Strong demand, a supply cap and lead times for new projects could further improve the market in the years to come.”

A recent report from the American bank indicates that “with a wave of government reforms, attractive real estate rates and a change in demand due to covid-19, “the economy of the emirate will continue to shine.

Sarah Stewart / AFP