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New generation of wealthy fuels boom in Dubai’s luxury property market

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The Tetris-like Atlantis Royal luxury development is one of the new landmarks for Palm Jumeirah, the artificial island that is home to Dubai’s elite. Seven years ago, when the first of its 231 luxury residences sold, a two-bedroom apartment cost just 5.5 million dirhams ($1.5 million).

But demand has soared since the pandemic, with owners clamoring for homes with pools and panoramic terraces for sale. A three-storey penthouse at the Royal Atlantis sold for Dh180 million this summer.

“2020 and 2021 are incredible years,” said Philippe Zuber, chief executive of its developer, Kerzner International. “Dubai is one of those global destinations that has managed the pandemic really well, so it puts Dubai on the map.”

The popularity of Atlantis Royal among buyers is a microcosm of Dubai’s luxury property boom, as a new generation of wealthy residents vie for dwindling luxury residences.

The influx includes Europeans seeking a sun-soaked, low-tax life; financiers fleeing coronavirus restrictions in Asia; Indians putting down roots thanks to an attractive new long-term residency scheme; One of the few havens open to them.

Prices will continue to rise next year, according to local brokerage Unique Properties, which predicts the cost of prime properties will rise 13.5 per cent in 2023.

Prosperity has permeated all areas of the market. Property group CB Richard Ellis said residential transactions in the 11 months to November surpassed the record set for the same period in 2009 – just before Dubai’s debt-fueled property bubble burst in the global financial crisis. Meanwhile, rents have risen by more than a quarter over the same period.

The Royale at Atlantis overlooking the Palm Jumeirah © Christopher Pike/Bloomberg

However, high-end products attract the fiercest competition. Leigh Borg, managing partner of Luxhabitat Sotheby’s International Realty, said Emirates Hills, synonymous with Dubai’s ultra-elite, has been massively oversubscribed since the pandemic caused demand to soar.

“Dubai has always attracted millionaires and billionaires, but now they’re moving here full-time and they want the biggest and best homes,” said Borg, who has sold 10 properties in the region this year alone , with a total value of AED 420 million.

Valuations in Emirates Hills are at an all-time high, while fewer than 5 per cent of its more than 600 properties are actually listed for sale, he noted.

His offerings include an eco-friendly, solar-powered modern villa on one of Emirates Hills’ most exclusive streets, priced at Dh349 million. “That’s what a new wave of buyers is looking for: a turnkey solution, something that’s ready to move in,” he said.

However, older villas that can be refurbished are also popular, with some villas doubling in value since the pandemic, selling for Dh110 million or more.

A surge in demand from the wealthiest buyers has prompted Damac, Dubai’s largest private developer, to shift its focus to luxury.

Its chief executive, Hussain Sajwani, embraced the switch last year when residences in the group’s new Cavalli Tower were snapped up for Dh20 million, with a penthouse there selling for $20 million. The price is more than three times that figure. He said he expected properties in his new luxury project along Dubai’s man-made canal to fetch Dh70 million.

Russians, who are often attracted to beachfront apartments, have become important clients, although the more mature European market remains the largest clientele. However, Sajwani said he expected an influx of new Chinese as Beijing continued to battle the coronavirus. “Our next boom will come from China,” he predicted.

While new projects are expected to come online soon, the limited stock of high-end properties will ensure the boom continues, developers say.

Foremost among these is the Palm Jebel Ali, another man-made island larger than the original Palm Jumeirah. However, the project being developed by government-owned Nakheel also offers a cautionary tale about the risks of investing in real estate in Dubai.

Started in the early 2000s, construction Jebel Ali Palm Island Shelved during the financial crisis, then delayed until the Judiciary Committee canceled the project this year. It is now being relaunched under a new master plan that reflects today’s much higher valuations. The first of hundreds of villas and thousands of apartments could go on sale as early as next month.

Hundreds of clients have held on to their original contracts for years, hoping to one day move in. Others who bought their units on the hot secondary market could lose millions of dirhams. A group of disgruntled investors is demanding compensation from the ruler of Dubai.

“I’m confused that they canceled the project after 19 years and started it again under a different name at the same time [prices] Five times more than what they originally sold for,” said Muhammad Azzam, one of those who initiated the claim. “With this action, investor safety has lost its meaning in Dubai. “

Nakheel said it was willing to provide up to one-and-a-half times the initial payment to invest in upcoming projects on the new Palm, but it would not refund money paid in private deals. “Settlements will . . . not be based on secondary market transactions that do not involve companies,” it said.

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