The real estate market in Dubai has witnessed an increase in foreign investments in 2022, creating ongoing discussions around the reasons for this increase, one of them being the currency fluctuations worldwide, especially the US dollar, and the following consequences.
Are you an international investor? Are you planning to buy an apartment or a commercial property in Dubai? If so, keep reading to discover how currency fluctuations and the rising US dollar impact Dubai’s real estate market.
Duabi’s Real Estate Market: Status Quo
Fundamentally speaking, various elements encourage investors to seek out luxurious residential and commercial properties in the Emirate, including Dubai’s advantageous location, favourable tax policies, and effective post-pandemic strategy, proving the flexibility and resilience of Dubai’s property market.
Based on that plan, Dubai’s real estate market started showing signs of recovery early last year – 2021, with buyers purchasing apartments following the relaxation of pandemic restrictions. Also, real estate prices have shown a recovery trend over the past 12 months.
As for 2022, and according to the Dubai Land Department figures, a record of AED 22.7 billion in real estate sales occurred in June of the same year, showcasing huge growth post-pandemic. Moreover, residential real estate transaction volumes increased by 60% and the value of sold properties increased by 85% in the first half of 2022.
With these numbers and elements considered, it is no surprise that foreign investors are gravitating towards Dubai. However, there’s more to it! Keep reading to discover more details.
2022 Foreign Investments in Dubai’s Property Market
Due to its highly diverse and stable economy, generating income from tourism and trade, Dubai keeps attracting foreign real estate investors. As such, Dubai’s real estate market has witnessed a massive increase in the number of foreigners investing in the property market during 2022, as international investors accounted for 68% of all buyers in sales, with a rise of 10% over the previous year.
Furthermore, according to research, the number of Russian buyers increased by 164%, while the French and English investors have increased by 42% and 18%, respectively. Interestingly enough, the number of Italians and Indians making investments in Dubai’s property market decreased by 8% and 17%, yet remaining of the five top nationalities investing in the market.
These figures describe the international investments made in the first half of 2022 compared to the same period in 2021.
To summarise, the top buyers this year were from India, the UK, Italy, Russia, and France, followed by Canada, Pakistan, Egypt, Lebanon, and China in the final place.
What Are the Reasons for Increased Foreign Investments in Dubai?
- European Investors
Lately, European investors have dominated Dubai’s real estate market since the region is regarded as a safe haven during economic downturns and since the dirham is pegged to the US dollar.
Additionally, Europeans have taken advantage of Dubai’s investment-safe environment to protect their capital from the weakening local economy. And the recent drop in the euro’s value below parity has prompted European investors to invest their capital in Dubai’s real estate properties.
- Russian Investors
For the first six months of 2022, Russians reportedly invested heavily in Dubai’s real estate, looking for a safe haven following the Western sanctions. So much so that the Russian investors ranked among the top five purchasers in Dubai’s real property market in the year’s first half.
Due to the ongoing conflict between Russia and Ukraine, companies based in Russia relocated to Dubai to cope with the sanctions imposed, which have had the most significant impact on start-ups and multinational companies.
All in all, the increasing demand by the Russians in Dubai’s real estate market has shown in Dubai property sales as they surged by 67% in the first three months of 2022 alone.
Given the above context, where does the US dollar fit into all this?
The Rising Dollar Impact on Dubai’s Real Estate Market
Dubai’s real estate transaction volumes get increased by the rising dollar, since these transactions involve currencies of lesser value than the US dollar. This demonstrates the global attraction to Dubai’s property market, especially from European and Russian investors.
Globally speaking, and when comparing Dubai’s real estate market with that of other global cities, it takes USD 1 million to purchase a prime property of 146 square metre in Dubai, while buying the same property in London and Paris requires a capital of USD 5.8 million and USD 3.5 million, respectively.
The rising of the US dollar, which is international in terms of strength and usage, is amplifying the global nature of Dubai’s real estate market as well, especially with the appealing incentives and regulations put in place by the government, attracting increasing international foreigners.
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