Global property investors, particularly those with substantial wealth, are increasingly turning their attention from London’s prime central areas to Dubai. This shift is attributed to concerns about the new Labour government’s tax and spending policies in the UK. Market studies and sector experts have highlighted this trend as a significant change in the investment landscape.
Dubai’s Attractiveness: High ROI and Affordable Luxury
Dubai offers attractive and consistent returns on investment (ROI) in its property market, making it an appealing alternative for affluent buyers. Even as London’s prime residential market experiences a downturn, Middle Eastern and US investors have emerged as the dominant buyer groups, particularly in the £15 million to £25 million price range, according to a report by the UK’s Beauchamp Estates.
The report notes that while London’s prime property market faces pressure from recent political changes, Dubai continues to benefit from an influx of top-tier home buyers. Investors find Dubai’s combination of affordability and strong returns compelling, with $1 million purchasing significantly larger properties in Dubai compared to London. This shift provides a competitive edge to the UAE’s real estate market in the short term.
Industry insiders are not surprised by the current trend, as Dubai has long been a popular destination for global investors. The UAE’s high quality of life, safety, year-round sunshine, and global connectivity have always attracted home buyers, including high net worth individuals (HNWIs). The current appeal lies in the highly competitive per square foot cost and the attractive tax-free ROI of 6-8% on average in Dubai’s residential real estate market. Conversely, London’s prime property prices have remained flat in recent months, with investors wary of potential tax implications under the new UK government.
The analysis by Beauchamp Estates, which reviewed sales of super-prime residential homes in London valued over £15 million during the first half of 2024, revealed a decline in transactions, from £829 million in the same period the previous year to £731 million. This downturn is largely attributed to reduced investment in ‘prime central London’ (PCL) homes, as investors await clarity on the new policy environment under the Labour government.
Dubai Real Estate Growing Investment Appeal
In contrast, Dubai’s prime property market is attracting significant investment, surpassing London in transactions for homes over $10 million. The trend shows wealthy buyers favoring smaller, more manageable properties in Dubai, ideal for occasional stays.
Most investors purchasing properties in Dubai are doing so either to let them out or use them as holiday homes, with some choosing to relocate their families. The demand spans from villas in Dubai Hills to ultra-luxurious homes on Palm Jumeirah and apartments in Dubai Downtown and the DIFC areas. On average, investors are spending a minimum of AED 2 million, with a noticeable surge in demand for higher-end properties. Some HNWIs with larger budgets are willing to spend over $10 million on properties in prime areas of Dubai.
While the UK remains a significant source of wealthy investors in Dubai, there is also notable interest from investors in India, China, the US, and various regions of Europe and Asia. Wealthy buyers are distinguished by their ability to quickly move and close deals, leading to rising prices despite some buyers waiting for a potential price correction.