Demand for Dubai’s property from European customers is rising and is expected to continue into next year as more people from Europe move to the UAE amid strong economic growth.
“The customer base has shifted today, the biggest customers are coming from Europe, no longer from Russia or Ukraine, and we believe that's going to continue, and it's going to grow further into 2025,” Ali Sajwani, managing director of Damac Properties told The National.
The slowdown in Europe’s economy, introduction of new taxes and changes to domicile and non-domicile resident rules in the UK, among other factors, are contributing to more Europeans moving to Dubai and setting up business in the emirate, Mr Sajwani said.
This trend is “driving the mid- to high-end property market (houses costing between Dh3 million to Dh8 million)”, Mr Sajwani said.
The UAE property market has been booming in recent years as more people buy property.
The government initiatives such as residency permits for retired and remote workers and the expansion of the 10-year golden visa programme and overall growth in the UAE’s economy due to diversification efforts is also supporting the property market.
During the third quarter, average prices in the Dubai residential market rose close to 20 per cent year-on-year, underpinned by a 19 per cent rise in average apartment prices and a 23 per cent increase in average villa prices, according to a report from CBRE.
“Europeans remain the main source of investors for Dubai’s residential sector, with UK nationals continuing to lead the way,” Matthew Green, head of research at CBRE Mena, said.
“This steady flow of outbound capital has been supported by a regime of high property and income tax rates across much of Europe and expectations of further increases following recent announcements, combined with ongoing fears over safety across many cities and the diminishing quality of life for many residents due to the residual impact of high inflation, high interest rates and stagnation in salaries.”
In October, Britain's first female chancellor, Rachel Reeves, presented her debut budget to parliament, unveiling £40 billion in tax rises.
The UK budget plans to increase employers’ national insurance contributions and increase capital gains tax, while also making changes to inheritance tax and stamp duty. The non-domiciled status will also be abolished.
Value-added tax will be introduced on private school fees from January, while stamp duty on second homes has been increased to 5 per cent.
Dubai-based Devmark also said that British nationals were the top foreign buyers of its properties, followed by Indians and Russians, in the first half of 2024 amid continued demand.
“The primary motivations for investing in Dubai include the city's strategic location between Europe and Asia, tax free property policies, flexible payment plans, excellent rental yields and strong capital appreciation in terms of return on investment (ROI),” Sean McCauley, chief executive of Devmark, said.
Bullish forecast for property prices
Dubai property prices are projected to continue to rise amid higher demand from buyers.
“Prices will continue to grow in 2025 and well into 2026 as Dubai is much more affordable when compared to other major cities,” and offers a “much better service and a much better way of living than any of the global cities,” said Mr Sajwani.
Average property prices in Dubai soared to Dh1,473 per square foot as of October 2024. In markets like London, New York or Singapore, average prices far exceed Dh2,500 per square foot making Dubai a cheaper option to buy property, according to a recent report from Better Homes.
Lack of adequate supply in the market is also supporting the market.
“The time you launch to the handover, it's three to five years. So it takes time for the supply to come into the market. The market is currently undersupplied ,” Mr Sajwani said.
About 36,000 new homes, including villas and apartments, are expected to hit the market by the end of this year, according to a recent report from ValuStrat. New supply is expected to rise to 46,000 next year.
Mr Sajwani said Damac will continue to launch new projects to capitalise on rising demand. This year it launched about 12,000 new home units and plans to roll out similar number of new units next year.
Last month, it launched Damac Islands development at Dubailand and sold more than 3,000 units in less than 10 hours, with sales totalling Dh10 billion, according to the company.
Partnership with Trump Organisation
Damac, which built the Middle East’s only Trump-branded golf course in Dubai, is open to work with the Trump Organisation again on new projects.
“If the right opportunity present itself, we are more than happy to work with our all trusted partners, whether it is the Trump Organisation or any other partners,” Mr Sajwani said.
The Trump Organisation, owned by the president-elect Donald Trump, is teaming up with London listed Dar Global to develop new projects in Oman, Dubai and Saudi Arabia. It aims to further expand in the region with new projects, its executive vice president Eric Trump told The National last week.
Acquisition deals
Damac will also be looking at acquisition opportunities, “but they have to be at the right price, and the deal has to make sense”, Mr Sajwani, said.
“It could be in any sector. In 2020, we acquired Roberto Cavalli, which is a fashion brand. So we're sector agnostic as long as we think we can add value to the business, we can drive the business and we can grow the business.”
Mr Sajwani is also the chief executive and co-founder of Amali Properties, which launched its first project, Amali Island, worth Dh2 billion within The World Islands off the coast of Dubai earlier this year.
The project, consisting 24 villas, has been sold out except for one villa and is expected to be delivered in the first quarter of 2027, he said.
