The global economy is facing recession, but the price of luxury houses in Dubai is soaring!
Low tax rate+low crime rate=paradise for the rich
In the crisis of economic recession, Dubai has become a safe haven for the rich.
According to the latest data from Knight Frank, a global real estate consultancy, the real estate price of Dubai has soared by 70.3% in the 12 months up to September this year, making it the fastest rising city in the global index compiled by the agency.
The Knight Frank index usually focuses on the most popular and expensive houses in a city - usually the part with the highest value of 5%. In contrast, London, Paris and New York saw growth of only 2.5%, 8.9% and 7.3% respectively.
As one of the safest countries in the world, the United Arab Emirates ranks the third in the world in terms of security index in 2020, and Dubai's crime rate is almost zero. The Dubai government also provides foreigners with 10-year visas, where only 4% of the transfer tax is needed to buy luxury houses, which also makes more and more rich people choose to flock to one of the cities with the most luxury houses in the world.
According to data from Henley&Partners, an immigration consulting company, the United Arab Emirates will attract the world's largest private wealth this year, with 4000 millionaires flowing in.
According to real estate brokers and developers to the media, transactions in the Dubai real estate market are very fast, and more than 70% of them are cash transactions, which means that the rise in interest rates has little impact on buyers.
Honey Deylami, executive partner of Luxhabitat, Sotheby's international real estate company, said:
For such "ticket size" transactions, customers do not want to experience the trouble of mortgage loans, and they can easily afford these figures.
So they will not apply to the bank for financing or mortgage loans.
There are also a variety of buyers, including wealthy Russians who sought refuge for their own funds after the conflict between Russia and Ukraine, as well as founders of start-ups with ample cash after the soaring oil prices and investors from neighboring Gulf countries.
Some of these rich people who bought luxury houses were attracted by Dubai's low taxes, while other customers were attracted by Dubai's permission to pay for real estate transactions with cryptocurrencies. For Russian customers, there was another important reason: the United Arab Emirates did not join the ranks of British and American sanctions against Russia.
In addition, the real estate registration in Dubai is not open, and the Ministry of Land and Resources of the United Arab Emirates does not provide access to the identity information of specific real estate buyers. Jodi Vittori, a non resident scholar of the Carnegie Endowment for International Peace, commented on the real estate market in Dubai:
Dubai is a relatively anonymous place where it is easy to buy real estate.
In every international crisis, money seems to flow there... In any case, it will still be a key component of their economic development plans.
Earlier this year, the Financial Action Task Force against Money Laundering (FATF) listed the United Arab Emirates on the grey list, partly because of concerns about illegal cash in the real estate industry. After the warning was issued, the United Arab Emirates said that it would continue to strengthen its efforts to combat financial crimes in cooperation with FATF, and said in another statement that it had confiscated 625 million dollars in various money laundering crimes last year.
Although analysts said that FATF's warning may increase the compliance costs of individual real estate companies, the recovery of the United Arab Emirates continues. The International Monetary Fund forecasts that the economy of the United Arab Emirates will grow by 5.1% in 2022, compared with 3.8% last year.
The overall housing market in Dubai is also rising. Last month, the average annual rent of Dubai's family housing reached 268800 dirhams (US $73200), and the rent rose 26% in the 12 months to September.
In March this year, Indian billionaire Mukesh Ambani bought a luxury house worth 80 million dollars in Dubai, setting a new record in the real estate market in Dubai. This record was broken a few weeks later by a mysterious buyer with a transaction of 82.4 million dollars.
Last week, Ambani spent another 163 million dollars to buy another luxury house on the Palm Island of Dubai, regaining the record.
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