An amenity-packed luxury neighborhood designed to dazzle foreigners and Dubai residents alike is rising from the dusty banks of an old saltwater fishing hole.
Today, it’s not much more than six square kilometers of desert pocked with building foundations, but by the time the United Arab Emirates city welcomes visitors for the World Exposition in 2020, the neighborhood known as Dubai Creek Harbour will contain nine high-end residential areas, as well as the biggest shopping mall, the largest Chinatown, and the tallest structure in the world.
The new neighborhood epitomizes the kind of rarefied lifestyle that Dubai has leveraged over the past decade to attract top foreign talent and businesses, with the expatriate population growing to 2.7 million, according to official population statistics in 2017. The city has boomed into an expanse of postmodern architecture, including the world’s tallest tower, the Burj Khalifa, at 828 meters, and now boasts first-class restaurants like popular sushi spot Nobu, as well as plans to build the world’s first Hyperloop shuttle, which will travel 140 kilometers between Dubai and Abu Dhabi in 12 minutes.
“Dubai is like a drug; from the minute you’re a tourist, that’s where the love affair starts,” says Paul Christodoulou, managing director at Gulf Sotheby’s International Realty, who has lived in the emirate for over a decade.
Now, the U.A.E. is in the midst of rolling out a series of policy reforms aimed at encouraging some of its millions of foreign residents and investors to put down permanent roots, buy homes, and open businesses in Dubai. So far, the forthcoming policies include 10-year visas for investors, and science, medical, and technical professionals, and will allow 100% foreign ownership in Dubai-based businesses, a major shift from a system whereby Emiratis had to own at least 51% of most companies. The slew of resident- and investor-friendly reforms, which some business leaders have called revolutionary, could unlock a windfall for the city’s economy and housing industry from the city’s expatriates, who last year alone remitted more than 164 billion dirhams (US$44.6 billion) to their home countries, according to government data.
“So far, Dubai has been more of an investors’ market than a primary one,” says Alexander von Sayn-Wittgenstein, director of luxury sales at brokerage Luxhabitat. “But a 10-year visa, whatever it will look like, will give some people more confidence to settle down.”
The federal cabinet, based in the U.A.E. capital Abu Dhabi, has slowly rolled out details since many of the new policies were outlined in May, but their potential impact is already evident in parts of the real estate market, says Mr. von Sayn-Wittgenstein. High-net-worth clients of his are now looking to transition from keeping a pied-à-terre in Dubai to owning full-time residences. Other brokerages and developers said they have recorded increases in inquiries as a result of the new measures, and long-term renters are house-hunting with more gusto in the city’s established neighborhoods, like the upscale Palm Jumeirah, and around the villa-dotted golf courses and the city’s bustling marina.
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Putting Down Roots
No matter how smitten with Dubai’s lifestyle, foreigners under the existing system have had to keep one foot out the door at all times, as U.A.E. law requires property investors and foreign workers to renew their residency visas every two years.
That is too short a time span for even high-earning professionals to justify buying, though recently more expatriates are making the leap to homeownership anyway, says Gulf Sotheby’s Mr. Christodoulou.
“Dubai historically has been a tenants’ market, but if you look at the expats in the past 12 months or so, the amount of first-time buyers who were originally tenants has increased,” Mr. Christodoulou says.
Long-term foreign residents represent a huge pool of untapped home buyers, he says. “Four friends of mine who have been renting for six, seven, eight, nine years now want to be homeowners.”
Analysts have compared the government’s reforms this year to the U.A.E.’s radical decision to open up property ownership to non-Emiratis for the first time in 2002. That decision 16 years ago sparked a wave of development that has transformed the desert seaport into a futuristic metropolis and haven for foreign investment, featuring man-made island communities, 16-lane highways, and a skyline of supertall skyscrapers.
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The stimulative reforms come at a pivotal moment in the housing-market cycle, according to Emaar Properties, the city’s largest real estate developer, which is behind the forthcoming megadevelopments Dubai Creek Harbour and the Dubai Opera District, as well as entire established neighborhoods like Downtown and Emirates Hills.
In 2014, frenzied investment in the city cooled considerably when the price of oil collapsed, and the drivers of Dubai’s real estate market—Emiratis and their neighbors in Saudi Arabia, according to statistics from the Dubai Land Department—had to tighten their purse strings. Subdued demand has left an oversupply of new development and caused the average price of villas and apartments to fall for four straight years, according to market data from website Property Monitor. The market has only recently started to show signs of price stabilization.
“The directives will lend further impetus to the property sector of Dubai, and are no doubt well timed, given that they boost market sentiment,” a representative for Emaar wrote Mansion Global in an email, adding that the reforms will encourage “professionals and high-net-worth investors to consider long-term investments in Dubai’s property sector.”
The changes also come as the city ramps up to host the World Expo in 2020, predicted to bring in 25 million visitors and a wave of new hires, mainly skilled professionals. The coming boom in international exposure will probably work in tandem with the new reforms to benefit the housing market, according to Damac Properties, another leading developer responsible for many of the city’s luxury villa and apartment developments.
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“The boost in infrastructure and construction development leading up to Expo 2020 is already apparent, and the U.A.E. continues to attract more foreign direct investment than other countries in the region,” says Niall McLoughlin, senior vice president of Damac.
“Once these new regulations come into effect at the end of the year, we could see many residents, who are currently paying house rent, consider buying homes. The move will also further solidify the U.A.E.’s status as one of the most investor-friendly countries in the world.”
Spoiled for Choice
Travelers descending on Dubai International Airport often get a prime view of the exclusive Palm Jumeirah, a man-made archipelago that from above looks like a piece of public art bursting from the coastline in the shape of a palm leaf.
The community of luxury apartments and villas built along the fronds of Palm Jumeirah is one of the city’s few neighborhoods that has seen prices tick up slightly in the past year. It’s one of several mature, amenity-packed neighborhoods that stand to gain considerably from the infusion of professionals and resident investors.
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Dania Alsammarae, an American whose parents are from the region, and her husband, are among the Palm’s 12,700 residents. A physician now working as a hospital administrator, Ms. Alsammarae, 38, says that vigorous professional opportunities originally attracted her to the city over a decade ago.
“The nice thing about Dubai, especially for our age group and our level [of education], is that we have the ability to access professional experience and get offered projects that we would never be able to do in the States,” she says. “That was key for me.”
It’s the advantage that Western-educated professionals often get in emerging economies, except that in Dubai she has access to a standard of living equal to or better than what she’d expect in her hometown of Chicago, she says.
From the apartment she owns on the Palm, Ms. Alsammarae can see the turquoise-blue expanse of the Persian Gulf. Outside the row of luxury apartment buildings where she lives, new mothers like her throng a long seaside promenade with strollers in tow, some taking the five-minute walk to Spinneys supermarket. She also benefits from a simpler work-life balance than do her career-driven friends in the U.S., as live-in domestic help in Dubai is exponentially cheaper than in the West.
“It feels like a little vacation, but I can drive to the city in 10 minutes and be in the office,” she says, adding that “it’s almost like you’re in San Diego.”
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Real estate on the Palm, though, costs at least 25% less than beach-side property in that Southern California city, according to data from real estate websites Property Monitor and Redfin.
“Dubai has some of the strongest infrastructure in the region in terms of personal property, in terms of public works,” she adds. “Restaurants, nightlife—there’s no limit to what’s available.”
Within the span of a few square kilometers, high-level professionals have their pick of lifestyle, from the Palm’s luxurious beach vibe to the suburban, country club–like atmosphere of the so-called Lakes, only minutes away on the mainland and featuring villas and townhouses. The Lakes borders another suburban stretch called Emirates Hills, one of the city’s most prestigious developments, where lavish villas dot two lushly landscaped golf courses.
A Boost From Foreign Investors
In the eight weeks following the announcement of residency and investment reforms in May, Gulf Sotheby’s recorded a 30% spike in online search traffic to its listings from outside of the U.A.E. And shares of two of the country’s most prolific developers, Emaar and Damac, jumped in the days following the news.
Brokers are particularly bullish on the potential for greater investment from the Asian continent, especially from Indians, who make up Dubai’s biggest cohort of foreign buyers and largest expatriate population. Indians invested roughly AED3 billion (US$817 million) in the first quarter of this year alone, according to figures from the Dubai Land Department.
Swati Sinha, a broker with Coldwell Banker, came to Dubai more than a decade ago from northern India. Her clients include Indians, Pakistanis, Russians, and Arabs, who are mainly looking for income-generating properties in the city’s high-end quarters.
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“Dubai’s massive infrastructure development, top-level security, hygiene levels, and overall lifestyle are the key to attract all sort of investors,” Ms. Sinha says, adding that Coldwell Banker’s existing clients have been upbeat about future growth due to the reforms.
The government has indicated that investors in a AED1 million property will also be able to apply for a 10-year renewable residency visa—a policy that will give Dubai a new edge in the global race to attact wealthy Chinese, says Stephanie Liu, an investment adviser with One Broker Group.
The U.A.E. stands to pull ahead, as governments in the United Kingdom, Canada, Australia, and elsewhere seek to curb foreign luxury buyers with punitively high taxes, and the fate of the U.S.’s primary investor visa scheme, called EB-5, remains uncertain. Developers have dispatched roadshows to Beijing, Shanghai, and Taipei to drum up Chinese investor interest.
Last year, Chinese were the sixth-biggest foreign investors in the city’s real estate market, according to stats from the Dubai Land Department. “Five years ago, China wasn’t even on the board,” Ms. Liu says.
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The price for new development in downtown “Beijing or Shanghai is now about US$20,000 per square meter, and here in downtown, the Burj Khalifa is selling” for about US$8,200 per square meter, she says.
She has already seen some of her wealthiest clients consider reshuffling their real estate assets to live more permanently in Dubai.
“For sure, the government made a good decision,” Ms. Liu says. “I have one client who purchased a duplex apartment, and now he wants to put his partner’s name on the title deed.
“They want to stay here for a longer time.”