Canal Front Residences. Image: Driven Properties.
Abdullah Alajaji, the founder, and CEO of Driven Properties, spends 15 minutes with Palace magazine to share his insights about the Dubai property market.
Breaking Records
We believe that the Dubai property market will continue to see exceptional demand in the new year, and that 2023 will be another record year for the market.
Abdullah Alajaji is the founder and CEO, Driven Properties. Image: Driven Properties.
Looking back at recent years from the perspective of a real estate industry insider, there’s a strange feeling of not having enough words to describe everything that has taken place, and yet, ironically enough, also being left speechless. This peculiar feeling is a result of all the tremendous things that happened in Dubai over the past few years, once again confirming that we are lucky enough to live in one of the “greatest places on earth”.
While we optimistically write our New Year’s resolutions, it’s good to reflect on the things that have created our reality today, all the while making plans for the year we’ve just welcomed. Let’s reflect on several Dubai property fundamentals, that since the autumn of 2020, have changed forever. Here’s how, and to a similar degree, why.
Pandemic Tourism and Migration
Affluent individuals and families around the world, predominantly from Europe, decided to visit Dubai for the first time, since it was one of the very few places that was open for tourism. It was the obvious alternative to ski resorts in Courchevel, Gstaad, and other popular winter destinations which had closed borders at the time. As these visitors became more attracted to the prospects of the city, many of them decided to call it home, while others decided to make it a new holiday destination, fuelling demand for property, particularly in the high-end segment of the market.
Enjoy canal views at Canal Front Residence. Image: Driven Properties.
This, coupled with the Expo Dubai 2020 bonanza, incredibly competitive immigration reforms and golden visa schemes, put Dubai on the world map and heightened its status among its global peers. Challenges in competing countries in Asia: Hong Kong’s appeal has lessened since China strengthened its influence on the Chinese Special Administrative Region (SAR). This reinforced Dubai’s position as a trade, tourism and financial hub, and has taken significant market share as a result. In addition, Singapore had its borders closed for a very long time – further reinforcing Dubai’s competitive advantage.
With the Russia-Ukraine crisis continuing and sanctions in place on Russia by the global community, Dubai has become a new hub for its high-net-worth citizens, with capital from affluent individuals and institutions from Russia and its neighbours continuing to pour into the Dubai property market. This took liquidity levels to new highs in Q3 2022 with Russians being among the top foreign buyers in Dubai’s property market. Of course, the strength of the Russian rouble against major currencies has played a pivotal role in making this market a competitive one. This trend is set to continue well into 2023.
Sea Mirror Residence. Image: Driven Properties.
“For the last year, we have seen a huge interest from CIS investors and from the migration of wealthy Russian individuals to Dubai. Initially, they were merely interested in waterfront locations with beach access, but as things progressed, they are now moving inland to communities like Arabian Ranches, where they purchase whole clusters to be close to Russian schools, etc. Relocate businesses to Dubai and open companies there. Most are happy with their investments, and there has been a 70 percent increase in value over the past year, especially in the luxury segment, in locations such as Port de la Mer, Palm Jumeirah, Bluewaters, Jumeirah, Dubai Hills, and Canal Front,” says Inga Brykulska, VP Business Development
Inga Brykulska, VP of Business Development, Driven Properties. Image: Driven Properties.
Moving forward, the main catalyst for further growth is China. This market has been closed for nearly three years, at a time when investment from China into Dubai was growing at its fastest rate. We expect this bottleneck to open soon, with the Dubai market benefitting as a result. In addition, as gaming is introduced in the country, a new population is set to make its way to Dubai, adding a new demographic to the demand mix. Finally, as rent prices expand at their fastest rate, and banks continue to lend to individuals, more individuals are making the property purchase decision, again fuelling demand growth.
Sea Mirror Residences. Image: Driven Properties.
It will be interesting to see data on mortgage numbers at the end of the year, with borrowing rates growing steadily and the three-month Emirates Interbank Offered Rate, also known as EIBOR, at 3.8 percent.
At Driven Properties, we believe that the Dubai property market will continue to see exceptional demand in 2023, and it will also be another record year for the market.