Expatriates cry foul over real estate investments in UAE city
With rents soaring and properties selling fast, the expatriate hub of Dubai in United Arab Emirates ( UAE) is in the throes of a housing boom bolstered by rich emigrates that has buoyed investors and burdened tenants.
Dubai, renowned for its towering skyscrapers and ultra-luxury villas, saw record real estate transactions in 2022, largely due to the influx of wealthy investors, especially from Russia.
Based on official figures, this helped the city rake in more than US$ 140 billion last year, marking a 76 percent annual rise in property market transactions.
“The market in the last year has massively changed. It is great for landlords, but it's not so good for tenants,” said Jacob Fletcher, a real estate broker from Betterhomes.
While it may not be as rich in oil as the capital Abu Dhabi, Dubai lures expatriates with tax incentives, a lush lifestyle and cheap services provided by low-wage labourers from Asia, Africa and the Middle East.
“In upscale Dubai neighbourhoods where properties sell for more than US$ 10 million, the 219 sales recorded in 2022 were more than the total recorded between 2010 and 2020,” said Knight Frank, a real estate consultancy firm.
The firm said property prices in these prime locations jumped by 44 percent in 2022 compared with the previous year.
“The luxury market in Dubai was the fastest growing in the world but remains cheaper than main big cities,” said Faisal Durrani, head of Middle East Research at Knight Frank.
Rich Russians
Over a decade ago, Dubai's property market slumped due to a financial crisis.
The city is now a magnet for ultra-rich investors, including Russians fleeing the impact of sanctions after their country's military operation in Ukraine.
According to Betterhomes, Russians were the biggest foreign buyers on Dubai's property market last year.
The firm also noted British, Indian, Italian and French nationals as among the top investors too.
Entrepreneurs, business executives, bankers and celebrities are among the wild assortment of clients rushing to clinch a home in one of the first cities to open up after the Covid-19 pandemic.
“We're seeing a lot of customers from Europe, who want to relocate here, send their kids to school here and start businesses here,” said Farhad Azizi, who heads property development firm Azizi Developments.
Most of Dubai's population of more than 3,5 million is comprised of expatriates. But the housing boom has made it more expensive for them to live in the city.
“There's about a 20 percent increase in the rental market this year compared to last year alone.
“The people that have lived here especially for a while are very not happy with how high the prices have gone,” said Fletcher of Betterhomes.
Take the hit
The real estate sector accounts for about a third of Dubai's economy.
The city's residents are used to volatility on the property market, with saw prices plummeting during the 2009 financial crisis as well as the 2020 pandemic.
With inflation spiralling worldwide, the rapid rise in rental prices in recent months has sparked alarm for many.
“The market is so insane. It's so expensive,” said an anonymous expatriate who has lived in Dubai with her husband and son for five years.
The family must find a new home because their landlord has decided to sell the apartment.
“The market is very, very different. So, we are going to have to pay the price and vacate,” she told AFP.
Social media networks are buzzing with disgruntled tenants who are locked in disputes with landlords over rental prices.
“What can we do? We've got to move so we have to take the hit,” the expatriate said.