Dubai, with a population of 3.3 million, is a world of superlatives. From Burj Khalifa, the world’s tallest building, to Palm Jumeirah, one of the largest artificial islands around, luxury living has become synonymous with the signature lifestyle Dubai offers.
Dubai Marina boasts the distinction as the largest man-made marina in the world, and it’s noted as one of Dubai’s most exclusive neighborhoods offering Riveria-style living. Palm Jumeirah’s blooming archipelago is full of villas, townhouses and apartments overlooking the sea with outstanding views of the Dubai skyline.
A 3-bedroom 3-bath apartment of 3,541 square feet with extensive water views and fully furnished at One at Palm Jumeirah is offered at $4.189 million. That’s just the starting point when it comes to high-end property in Dubai.
Driven Properties is Dubai’s leading luxury real estate brokerage, property management, mortgage, and consultancy company. Founded in 2012 by managing director Abdullah Alajaji, Driven Properties has both local and international clients.
Below I explore the dynamics of today’s luxury market in Dubai with Abdullah Alajaji.
EP: Can you discuss Driven’s success in the Dubai Market and where Driven is positioned?
AA: When I founded Driven Properties in 2012, the issue I found from the leading players in the market was a lack of structure, processes, and general professionalism or institutional know-how. My background as an investment banker gave me insight into how large investors make decisions, and what information they require to take calculated risks. This approach set the foundation for how we operate as an organization: having a proper organizational structure that respects processes and embraces technology and relying on accurate up to date information for data-backed decision making.
Over the years we adapted the same formula to expand into every segment of the real estate market with a key focus on the ultra-high-end luxury property segment. We also operate in both the secondary market and off-plan residential sales, as well as leasing, property management, and holiday homes. We also set up a co-working space and have a team specializing in commercial and industrial real estate across the city.
The key to our success lies in our people. We are proud to have long-lasting relationships with our team, many of whom have been with us since the very beginning. We always look to nurture our team to grow and develop from within.
Our experience in the luxury segment is second to none in Dubai. We understand luxury real estate, and we know what our high-net-worth clientele expect in terms of service.
Ep: How would you describe Dubai’s luxury market fundamentals?
AA: Dubai was always promoted as a luxury destination bridging the gap between East and West. Any luxury brand worth mentioning boasts a sprawling location in The Dubai Mall, the police have a Bugatti, and the selection of high-end dining options compete with any major city in the world.
Looking at Dubai from above, you quickly realize that the whole city is essentially a beach. This waterfront lifestyle has attracted HNWIs from across Europe, Russia, and Asia to look to Dubai as a holiday escape during cold winters at home.
When comparing the quality of life one can buy into in Dubai with any other leading global city, it’s astonishingly affordable. When considering the fact that Dubai is one of the safest places in the world, its status as a tax haven, and its central geographic location, it’s understandable why Dubai has consistently experienced some of the fastest population growth outside of China for the last decade.
With extreme growth over the last two decades, the city’s rapid expansion in supply caused concern, triggering the government’s initiatives to curb supply which proved effective in rebuilding confidence in the property market. However, the vast majority of new supply caters to the mid-segment of the market, further from the city’s core in upcoming communities.
Dubai’s effective management of the COVID-19 pandemic paired with its world-leading vaccination drive has helped attract international attention. Since the start of this year, investors around the world, especially from Europe and Asia, began flowing into Dubai to take advantage of the effective COVID-19 measures in place. While various places around the world went into third and fourth lockdowns, Dubai residents were enjoying a relatively normal lifestyle with simple mask mandates and social distancing measures.
This influx of new demand drove a significant increase in prices for centrally located high-end communities, particularly in the high-end luxury apartment and villa segment of the market.
The luxury property market in Dubai has always been about location. Essentially all luxury developments have either a beach or waterfront element, or a central urban location near CBDs such as Downtown Dubai and the Dubai International Financial Centre.
Believe it or not, Dubai actually has a severe lack of high-end property supply, with only a handful of projects catering to the ultra-high-net-worth segment of the market. This has caused double or even triple-digit percentage increases in certain areas, with some areas experiencing price increases over 100% since the start of the year.
Luxury property developers are now scrambling over the last few super-prime plot locations available across the city to launch their upcoming projects, and the secondary market has limited options due to the majority of owners being end-users.
EP: What is the mix of local and foreign buyers?
AA: Dubai has always embraced expatriate workers from around the world. Roughly 90% of Dubai’s population are foreign expats, with only 10% being UAE Nationals.
This significantly increases Dubai’s reach on a global level, with these expats having friends, families, and businesses that interact and invite attention to Dubai as a tourist, business, and investment destination. The city’s central geographic location has allowed Dubai International Airport to become one of the busiest airports in the world and position itself as a key aviation hub for long-haul flights connecting Europe and Asia, with more than 15 million visitors passing through every year.
With Dubai winning the bid to host the world expo, Dubai Expo 2020 is set to attract an additional 15 million visitors from October 2021 to March 2022. The city’s success will be showcased to a global audience that will consider Dubai’s status as a world-class lifestyle destination.
Given the demographics of the city, Dubai has always relied on foreign investment in the real estate sector. Double-digit rental returns and high potential for long-term capital appreciation have proven attractive to investors, while the lifestyle, security, and ease of doing business have attracted end-users from around the world that either relocate permanently or have a second home in the city.
The majority of foreign investment in Dubai comes from Europe, Asia, CIS (Commonwealth of Independent States) countries, and the Middle East. The majority of European buyers are from the UK, France, and Germany. Asian buyers have always invested in Dubai, led by India and Pakistan; with China, Japan, and Korea becoming more prevalent recently. CIS countries including Russia, Kazakhstan, and Ukraine have always seen Dubai as a leading destination for a second home. Middle Eastern buyers including Saudis, Kuwaitis, and Iranians have also been long-term investors in Dubai, witnessing its growth and expansion first-hand.
EP: Where do foreign buyers come from and what types of properties do they buy?
AA: European and CIS buyers prefer beach or waterfront properties, typically looking to use it as a holiday home to use during cold winters in Europe and the CIS Region. Asian clients are typically interested in centrally located investment properties with stable income, strong rental returns, and good capital appreciation potential. Middle Eastern clients are more diversified, with some preferring waterfront properties and others interested in centrally located properties.
EP: Describe the local Dubai buyer?
AA: Dubai is an international hub with 90% of its residents being foreign expatriates. Although they are not from Dubai, they have typically been living in the city for several years before making their purchase decision.
After experiencing the city firsthand, they decide to put down roots, start or grow their families, and start businesses that benefit from the tax-free environment. With record-low interest rates and attractive mortgage terms, most local buyers find it much more sensible to purchase a property rather than continuing to pay rent long term.
Many expats plan to work in Dubai for a few years, bolster their savings, and return to their home countries in a stronger financial position. The reality is once they become accustomed to Dubai’s safety and lifestyle, they find it less attractive to return home and many decide to purchase once this becomes evident.
UAE Nationals are the leading real estate investors in Dubai. They invest heavily in the local real estate market, with many of the leading local families being large property developers and landlords.
EP: How has the pandemic impacted Dubai’s luxury market?
AA: Dubai’s handling of the pandemic paired with its world-leading vaccination drive was one of the key drivers of the real estate market in the last year or so. Cash-rich local buyers began picking up undervalued luxury properties almost immediately after the pandemic struck, taking advantage of panic sellers in distressed positions.
The government’s rapid implementation of a city-wide sterilization program effectively limited the spread of COVID-19 in the early stages of the pandemic. With travel restrictions, mask mandates, and social distancing measures also proving effective in managing the spread of the virus.
The World Trade Centre was converted to a 3,000-bed hospital to ensure there was always a surplus of facilities available to handle a surge in hospitalizations. Thankfully this proved to be unnecessary as cases were significantly reduced through other initiatives.
The government ensuring that the infrastructure was in place to manage cases effectively provided residents with a sense of comfort and alleviated fears of the pandemic’s impacts, and businesses were able to gradually return to a relatively normal operation quicker than anywhere else in the world.
Dubai’s successful strategy to minimize the impact of the pandemic was arguably the best in the world. As scenes of Dubai residents living freely spread across social media, flights to Dubai from around the world were full of visitors eager to escape lockdown restrictions in their home countries.
The impact of this influx of visitors to the city is evident in the property transaction records, especially for the most sought-after luxury projects in the city. In one of the most exclusive communities in Dubai, Jumeirah Bay Island, prices for land plots have doubled in value over the last 12 months.
The fact that ultra-high-end properties have experienced the highest price increases during this period correlate directly with the trend of ultra-high-net-worth clients relocating to Dubai as their second home destination.
Furthermore, the pandemic’s impact on traditional office work environments has accelerated the trend in remote working. This has allowed many international businesspeople to relocate their business operations to Dubai and take advantage of a relatively normal lifestyle.
Many European clients used to ski vacations in the Alps during the winter were unable to make these trips over the last year due to the pandemic. Many first-time visitors to Dubai fell in love with the city and saw the potential of owning a property as a very attractive alternative.
As a company specialized in the luxury segment of the market, we have broken every sales record in our company’s history since the start of the year.
EP: According to Gulf News, in 2020 Dubai recorded a 21% increase in private jet traffic. Look to Dubai to continue attracting high-net-worth investors seeking out the very best in ultra-high-end luxury properties and five-star accommodations.