Dubai’s luxury real estate market skyrockets as world’s rich flee coronavirus

After nearly three decades in London, Christophe Reech was fed up with the city’s pandemic blockages. This spring, he sold his luxurious townhouse and flew to the Sheikh of the Dubai Desert to start a new life with his family.

There was no turning back, he said. The French business mogul’s super-rich foreign friends were doing the same, leading to an unprecedented increase in sales of Dubai’s most exclusive properties.

“Here in Dubai, there is only one strategy: business as usual,” said Reech, chairman of an eponymous group that owns real estate and fintech companies. The philosophy is simple: “Let’s make sure everyone is vaccinated and keep everything open. “

“Of course it attracts people like me,” he said.

As vaccines spread unevenly around the world and waves of infections force countries to expand restrictions, cash-brimming foreign buyers have flooded Dubai’s high-end real estate market, one of the few places in the world where they can dine, shop and do business in person.

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They are cornering a record number of luxury villas and penthouses, causing prices to skyrocket in this booming market.

Sales of once-slow high-end properties in Dubai climbed 230% in the first quarter of 2021, compared to the same period last year.

Prices in some high-end areas have increased by 40%, according to Property Finder, the country’s largest real estate website.

A record 90 properties worth 10 million dirhams each ($ 2.7 million) changed hands last month, in addition to 84 in March, surpassing highs reached eight years ago, according to the real estate consultancy firm Property Monitor. For comparison, there were 54 such transactions in all of 2020.

“Tons of people come in and buy multi-million dollar properties on the spot, without any due diligence time,” said Matthew Cooke, partner at Knight Frank consulting firm, which manages penthouse sales on the man-made archipelago. of Palm Jumeirah in Dubai.

As in previous cycles, cash buyers began to snatch homes at bargain prices and flip them for a profit. Analysts say this will continue until prices rise too high and yields decline.

How long does the craze last and what awaits the city dotted with skyscrapers remains unclear. Home prices are still falling to mid-levels in the city’s saturated real estate market, which has seen values ​​drop sharply from peaks seven years ago due to overbuilding.

Average selling prices for residences in the Burj Khalifa, the world’s tallest building, slumped to $ 400 per square foot this month from $ 1,300 in 2013.

“The market is going through a boom period … but people are very aware that Dubai can run too fast and everything collapses,” said Jackie Johns, partner at Premier Estates, a subsidiary of Christie’s International Real Estate, referring to to the debt crisis that brought the city to its knees in 2008.

The wave of success in the luxury market is not unique to Dubai, as ultra-low interest rates and families’ desire for more space have seen the wealthy in cities like New York and Paris scramble into places like New York and Paris. suburban mansions. But there are other factors at play in the glitzy emirate, home to long-haul carrier Emirates and the tallest tower in the world.

Since it first reopened to tourists last summer, Dubai has established itself as the global vacation spot prone to pandemics.

With no mandatory day-long quarantines, foreign visitors are now partying in Dubai’s bustling bars and beaches, their selfies at resorts and helipads stoking resentment at home.

The influx of tourists contributed to the dramatic increase in coronavirus cases in the country in January, prompting the UK to suspend flights.

But the United Arab Emirates, with its young population and low death rates, has fared relatively well during the pandemic.

The country of more than 9 million people, which relied heavily on the Chinese state-backed Sinopharm vaccine for its vaccination campaign, administered 10.6 million doses of the vaccine.

A global financial center known as an oasis in the volatile Middle East, Dubai has long benefited from capital flight. Palm Jumeirah owners – who recorded 43% of all April transactions – include Afghan warlords and the political elite from countries like Nigeria, Syria and Lebanon, all looking for a place safe to park their savings.

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