Building The Future: How Dubai Is Attracting Top Luxury Real Estate Investors

Dubai＊s already booming economy has surged recently on the back of an influx of foreign wealth driven by luxury real estate projects such as the Burj Binghatti Jacob & Co. Residences 每 the crown jewel of Dubai, Bugatti residences, and the now revived Palm Jebel Ali.

According to a report by Knight Frank, Dubai now accounts for about 17 per cent of global luxury real estate sales, up from 2 per cent in 2019. Into this market has emerged a new generation of ultra-high net worth individuals keen to invest in the emirate.

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Faisal Durrani, Partner 每 Head of Middle East Research, Knight Frank says Dubai has emerged as a world class second homes market, with 66 per cent of global HNWI (High Net Worth Individuals) keen to purchase a second home in the emirate. This marks a sharp departure to previous market cycles that were driven by speculative activity.

Furthermore, with US$ 1 million securing around 1,100 square feet of prime residential space in either the Palm Jumeirah, Emirates Hills, or Jumeirah Bay Island, Dubai is one of the world＊s most affordable luxury markets.

※Indeed US$ 1 million in Dubai secures three times more prime residential space than London or New York and ten times more than you can buy in Monaco,§ says Durrani.

Arash Jalili, Founder and Chief Executive Officer of Unique Properties, says that the city has seen a sustained growth in H1 2023, and the country is on pace to see growth of nearly 14 per cent throughout the year.

※Dubai has witnessed a tremendous surge in its property sector this year and this has only continued to increase every month with the best results being witnessed in the second quarter of the year thus far,§ says Jalili.

Surge in Indian Investors

One demographic that has been particularly active is that of India, which boasts a burgeoning middle class ready to test their business acumen in the rarified heights of Dubai＊s gleaming towers.

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According to Unique Properties, over 88.52 per cent of the country is made up of a diverse mix of nationalities; Indians represent the largest demographic of expatriates at 27.49 per cent. This figure is anticipated to rise further, and subsequently support the emirates＊ forecasted AED 300 billion in real estate sales transactions in 2023.

India is becoming increasingly affluent and its HNWI population, those with assets valued at $1 million and above, is projected to see a notable growth surge in the coming years. In 2022, the country＊s HNWI population was recorded at 797,714 people; a growth rate of 107 per cent is expected through 2027 for this number to reach 1.65 million people. Moreover, Indian ultra-high-net-worth individuals (UHNWIs), who are classified as those with assets valued at $30 million and above, will reportedly grow by 58.4 per cent during this same period.

Data from the Dubai Land Department (DLD) shows that Indian investors accounted for 20 per cent of all property transactions in the emirate in the first quarter of 2023, reflecting a 15 per cent year-over-year (YoY) increase.

Ties between Dubai and India are not a recent phenomenon but rather date back decades. Durrani says, ※Dubai is a cultural melting pot and has deep historic and economic trade links with India. Indeed, when land around Dubai Creek was designated as a tax-free zone in the early 1900＊s, Indian merchants, alongside with Iranian traders were the first to settle in the city.§

Another factor to consider, points out Jalili, is Dubai＊s tax advantages and favourable policies such as the UAE＊s Golden Visa Program of which global investors are becoming increasingly aware. ※These factors that have impacted Dubai＊s real estate market to witness a 46 per cent growth in the first half of 2023 and are some of the reasons why the city has been ranked as the first regionally and fifth best to live in by the World＊s Best Cities report 2023.§

Top Luxury Destination

For Dubai＊s luxury brands the emirate is one of the most important markets in the world, for goods and now real estate with brands such as Bugatti and Jacob and Co choosing to invest.

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Benjamin Arabov, CEO 每 Jacob & Co, says Dubai is one of the company＊s most successful markets. ※As our brand and our business expand globally, we register demand and interest to expand in other luxury territories apart from watches and jewellery.

※We felt that there was a demand for a residential tower designed by our Chairman and Creative Director, Jacob Arabo. It＊s been a personal passion of his to design spaces. He did it with his homes, with all our brand boutiques, so for him the Burj Binghatti Jacob & Co. Residences is a dream project.§

However, key challenges remain in Dubai＊s prime residential market is a shortage of supply in the city＊s prime neighbourhoods of the Palm Jumeirah, Emirates Hills and Jumeirah Bay Island, according to Durrani.

※These three locations are highly sought by global HNWI, and any developments brought forward in these areas are likely to be rapidly absorbed by the market, as evidenced by the repeat record sales prices being achieved at new developments on Jumeirah Bay Island. The flip side of the equation is a lack of development sites in these areas.§