A six square kilometre area of land is mapped out in the dusty Dubai Desert. In it today sits only building foundations in their early stages. But this site – once an old saltwater fishing hole – is set to become an amenity-packed luxury neighbourhood; an area designed to dazzle foreigners and residents alike.
The development of the neighbourhood known as Dubai Creek Harbour is due to be completed by 2020 when the United Arab Emirates city welcomes visitors from around the globe to the World Exposition, and will contain nine high-end residential areas as well as the world’s biggest shopping mall, the world’s largest Chinatown and the world’s tallest building.
The glamorous lifestyle on offer in Dubai is second to none with breathtaking, postmodern architecture as far as the eye can see, and the new neighbourhood will only further solidify the appeal the city has leveraged over the past two decades to attract only the top foreign talent and businesses.
“Dubai is like a drug; from the minute you’re a tourist, that’s where the love affair starts,” Paul Christodoulou, managing director at Gulf Sotheby’s International Realty, told Mansion Global magazine.
Dubai’s real estate market took a considerable hit in 2014 when the price of oil collapsed, resulting in locals and investors from neighbouring countries such as Saudi Arabia tightening their purse strings. Subdued demand naturally followed triggering an oversupply of developments, the effects of which are still being felt with the average price of villas and apartments falling for four straight years.
Following an almost 10 per cent decline in property prices in 2017 alone, the U.A.E is now taking measures to inject life back into the property market through a series of policy reforms aimed at encouraging foreign residents and investors to buy property and open businesses in Dubai.
Under the new policies, investors and science, technical and medical professionals will now be given 10-year visas in the country. The government will also allow 100 per cent foreign ownership in Dubai-based businesses, a major change from the old system where Emiratis were required to own at least 51 per cent of the majority of companies.
The policies are expected to revitalise the waning Dubai property market, so much so that analysts have compared their introduction to the U.A.E’s decision in 2002 to allow foreign property ownership for the first time ever.
It was this decision – at the time considered by many as radical – that allowed the U.A.E to transform into the futuristic metropolis it is today; dusty desert streets filled with some of the fastest cars the world has ever seen and a city skyline comprised of towering, mesmerising skyscrapers.
While the policies will only come into effect at the end of the year, their potential impact is already being felt across parts of the city’s property market, such as Palm Jumeirah; a man-made archipelago designed in the shape of a palm leaf bursting off Dubai’s coastline. It’s one of the neighbourhoods where prices have increased slightly in the past year and stands to gain considerably from the incoming influx of international investors.
Hype around the upcoming reforms has already started to build in the eight weeks since announcements with Gulf Sotheby’s reporting a 30 per cent increase in web traffic to their residential listings from people outside of the U.A.E.
India (10,628) was the country with the largest number of property transactions in Dubai in 2017 investing roughly AED3 billion ($1.12 billion AUD) in the first quarter of 2018 alone, and the general feeling is that these figures are only going to rise even further.
The same applies for the affluent Chinese market who until now have been turned off investing in the Gulf city because of the strict regulations. But given the U.A.E government’s indication that investors spending over AED1 million on a property will now be able to apply for a 10-year renewable residency, it’s likely these new relaxed conditions will give Dubai the edge in the seemingly never-ending global race to attract wealthy Chinese buyers.
The soon to be introduced policies with the purpose of attracting foreign investors into the U.A.E, come at a time where governments of other countries around the world such as Australia, Canada and the United Kingdom are aiming to do the opposite by implementing measures such as increasing taxes, only allowing the purchase of newly built developments and making stricter rules on owners leaving their property empty.
According to the Dubai Land Department, Chinese were the sixth-biggest foreign investors into Dubai’s real estate market in 2017 with roughly 3,000 transactions, but this is a far cry from five years ago when China wasn’t even on the board.
For so long Chinese investors have had a love affair with the Australian property market, drawn to its shores by the high quality of life, security and top infrastructure development. Dubai has many similar characteristics to Australia, and following the Australian government’s decision to tighten the screws on foreign property investment into the country, Chinese buyers are wide-eyed, keenly awaiting the emergence of the next property hotspot.
If market trends continue and the new government policies live up to their full potential, Dubai may just be the hotspot the Chinese are searching for. Combined with far cheaper property prices than their homeland – new developments in Shanghai and Beijing are currently selling for about $27,000 AUD per sq m compared to $11,000 AUD per sq m in the Burj Khalifa – Dubai’s property market could reach towering new heights if the Chinese start injecting their vast wealth into the city.
What was once a property market with an ‘Emirati-first’ outlook designed to first and foremost cater to the needs of their own compatriots, this strategy meant foreigners had to keep one foot out the door at all times as law required investors and international workers to renew their visas every two years.
When the relaxed policies come into effect at the end of 2018, Dubai’s property market is expected to thrive once again, reaffirming its status as one of the world’s leading global cities.