According to research, a massive migration of Russian investors into the sector has played a significant role in the rise in Dubai’s real estate prices.
For many years, wealthy businesses and investors from throughout the world have found the UAE, and particularly Dubai, to be a desirable location. These extremely wealthy individuals travel to Dubai in search of the city’s renowned stable market and luxurious lifestyle.
Although approximately 90% of the roughly 10 million residents of the UAE are foreigners, including nearly 90% of Dubai’s population, the Russian wave that arrived in the UAE in 2022 completely transformed the city.
The Dubai real estate market remained relatively stable until Russian billionaire investments in real estate led to a 47 percent increase in property costs, data shows.
Dubai’s real estate market experienced its most sustained period of growth in the first few months of 2022. The Dubai Land Department reports that in April 2022 and May 2022, respectively, the sector’s sales climbed by 45% and 51% year over year.
More than 86,000 home sales transactions were registered in Dubai in 2022, surpassing the previous record of 80,000 in 2009. In addition, property sales in 2022 totaled $56.6 billion, an increase of more than 80% from 2021.
Alex Galt, founder of Realiste, stated: “I would likely advise investors to carefully monitor the current situation in the Dubai real estate market. While it has experienced a period of prosperity due to Russian investments, there are potential challenges ahead, such as soaring rent and property prices. Investors should conduct thorough market research, assess the risks, and consider diversifying their portfolios to mitigate any potential negative impacts in the future.”
Russian citizens have experienced difficulties opening bank accounts and sending money to the UAE as a result of Western restrictions on a number of Russian banks. As a result, the UAE Central Bank authorized the MTS Bank of Russia to launch operations in February 2022, giving Russian investors some financial breathing room.
European investors are starting to replace Russian investors in the Dubai real estate market as the Russian wave of investment recedes. They currently hold around 30% of the market. Indian investors come in second with a market share of about 20%. According to Realiste data, it is improbable that the Chinese will continue to occupy third place by the end of the year. “The real estate market is dynamic, and investor preferences can change, so it’s essential to monitor ongoing trends,” said Galt.