Dubai luxury home market soars as rich flee pandemic
DUBAI, United Arab Emirates — After nearly three decades in London, Christophe Reech was fed up with the city’s pandemic lockdowns. This spring, he sold his luxury townhouse and jetted off to the desert sheikhdom of Dubai to start a new life with his family.
There was no turning back, he said.
The French business magnate’s superwealthy foreign friends were doing the same, driving an unprecedented surge in sales of Dubai’s most-exclusive properties.
“Here in Dubai, there’s only one strategy: Business as usual,” said Reech, chairman of an eponymous group that owns real estate and financial technology companies. The philosophy is simple: “Let’s make sure everyone’s vaccinated and keep everything open.”
“Of course that attracts people like me,” he said.
As vaccines roll out unevenly worldwide and waves of infections force countries to extend restrictions, foreign buyers flush with cash have flooded Dubai’s high-end property market, one of the few places in the world where they can dine, shop and do business in person. They’re snapping up record numbers of luxury villas and penthouses, sending prices rocketing in this boom-and-bust market.
Sales of Dubai’s upscale properties, once slow, soared 230% in the first quarter of 2021, compared to the same period last year. Prices in some top-end areas rose as much as 40%, according to Property Finder, the country’s largest real-estate website.
A record-breaking 90 properties worth 10 million dirhams each ($2.7 million) changed hands last month, on top of 84 in March, surpassing heights hit eight years ago, according to real estate consultancy Property Monitor. For comparison, there were 54 such transactions in all of 2020.
“Tons of people are coming in and buying multimillion-dollar properties on the spot, with no due diligence time whatsoever,” said Matthew Cooke, a partner at consultancy Knight Frank, who manages penthouse sales on Dubai’s Palm Jumeirah artificial archipelago.
As with previous cycles, cash buyers started snatching up homes at bargain prices and flipping them for profits. Analysts say that will continue until prices rise too high and returns diminish.
How long the craze lasts and what awaits the city then remains unclear. Home prices are still falling in the middle tiers of the city’s saturated property market, which has seen values drop sharply since peaks reached seven years ago due to overbuilding. Average residence sale prices in the Burj Khalifa, the world’s tallest building, collapsed to $400 per square foot this month from $1,300 in 2013.
“The market is going through a boom time ... but people are very aware that Dubai can run too quickly and it all falls apart,” said Jackie Johns, partner at Premier Estates, an affiliate of Christie’s International Real Estate, referring to the debt-driven crisis that brought the city to its knees in 2008.