Dubai’s red hot property market boomed in the first half of the year as investors flocked in, with Russians among the top five buyers as the emirate benefited from an infusion of wealth as a result of Western sanctions.
Residential real estate transaction volumes increased by 60 percent in the first half, with property values increasing by 85 percent, according to research by property consultancy Betterhomes.
India, the United Kingdom, Italy, Russia, and France were the top buyers, followed by Canada, the United Arab Emirates, Pakistan, and Egypt secured eighth place, Lebanon, and China.
Read more: Pakistanis own $10.6b property in Dubai – more than SBP’s dollar reserves
According to Betterhomes, demand was fueled by geopolitical instability in Europe and mortgage buyers eager to get in ahead of well-anticipated interest rate hikes.
It has been reported earlier this year that Russians were pouring money into Dubai properties, seeking a financial haven in the wake of Western sanctions on Moscow over its invasion of Ukraine.
In the first half of the year, a record 37,762 units were sold, it said, citing Dubai Land Department data, with residential property market transactions totaling nearly 89 billion dirhams ($24.23 billion).
Early last year, Dubai’s property market began to rebound from 2020’s severe dip, with buyers snapping up luxury units as the emirate eased pandemic restrictions faster than most cities around the world.
S&P Global Ratings, on the other hand, stated in October that Dubai’s real estate recovery was frail and uneven, and that an oversupply of residential homes would influence prices in the long run.
Pakistanis Are Third Largest Foreign Investors in Dubai Real Estate: South Asia Investor Review
On May 20, 2022, South Asia Investor Review shared that Pakistanis have invested $10.6 billion in Dubai real estate, ranking them as the third largest investors in the city on the Gulf. Indian investors lead Dubai real estate investments with $29.8 billion, followed by British investors’ $14.7 billion investment.
Figure 1: Real Estate held in Dubai 2020: Top 20 Countries
With at least $146 billion in foreign wealth invested, the Dubai property market is now the world’s largest offshore investment market for foreign investors. It is now twice as large as the London real estate market in terms of wealth invested by foreigners through shell companies. There are nearly 20,000 unique foreign owners of Dubai real estate from Pakistan, the third largest number behind almost 35,000 Indian owners and about 23,000 owners from the United Kingdom, according to the EU Tax Observatory.
Many rich Pakistanis, including top politicians and their family members, own real estate in Dubai. Most of the top politicians from Pakistani political parties like PPP, PML-N, ANP and MQM own Dubai real estate. A 2020 Transparency International report said the following about Dubai’s attraction to foreign unexplained wealth:
“The UAE’s booming construction and real estate sector emerges as another major weakness. It accounts for a fifth of the Emirates’ GDP but remains incredibly vulnerable to money laundering. Complex ownership structures can be used to obscure the identity of those buying property, as well as where their money is coming from.”
Despite the UAE’s role as a major international hub for finance and trade, the report concludes that authorities there are not cooperating with international partners. This could make the Emirates an attractive location in which “criminals could operate, maintain their illegal proceeds, or use it as a safe haven.
The FATF report confirms what investigative journalists, anti-corruption activists and whistleblowers have been saying for years: the UAE is a key piece in the global money-laundering puzzle. Its susceptibility to money laundering has seen it appear time and again in major cross-border corruption scandals.
However, recent ranking of Pakistan among top ten buyers of Dubai property is alarming but not surprising as it is evident that deteriorating economic conditions have shaken investors’ confidence in the country.
At one side, people are struggling to meet their basic needs in the testing situation of high inflation and on the other side people have enough to invest in foreign property. It clearly indicates massive income inequality within the country.