Dubai and Abu Dhabi named as favoured locations by world's wealthiest homebuyers
Dubai and Abu Dhabi have both featured on a new ranking of the 50 most important cities for property ownership among the world’s wealthiest people.
The Alpha Cities Index has been created by consultancy Wealth-X and is a ranking of the cities that ultra high net-worth individuals (UNHWIs) – those with a net worth of US$30 million or more – believe to be most attractive when considering property purchases. Cities were rated on a series of practical, emotional and cultural factors.
Three Middle East cities made the top 50 with Dubai securing the highest regional placing at 36th. Abu Dhabi was ranked 50th and Kuwait City was joint 42nd.
US cities dominated the list, with 12 out of the top 25 locations, but only one US city appears in the top five – New York, which was ranked second. London was named as the top city for wealthy buyers.
The index appears in Wealth-X’s new Global Property Handbook guide, which was compiled alongside US-based brokers Warburg Realty and Paris-based Barnes International Realty.
It found that 10 per cent of UNHWIs own five or more properties. It also said the market for luxury residential property had been buoyant between the aftermath of the global financial crisis and 2015, but had started to slow in the first half of last year.
The report also said governments “in a number of countries” had introduced measures to discourage wealthy foreign buyers from snapping up homes because of fears that they would price local buyers out of the market.
Frederick Warburg Peters, the chief executive of Warburg Realty, said: “The luxury real estate industry certainly faces headwinds, including the ongoing weakness in the euro zone, uncertainty triggered by Brexit, and related reduced purchasing power among European buyers. The degree of political insecurity – certainly in the US market – is also a significant factor.”
Sameer Lakhani, the managing director of Global Capital partners, said that Dubai’s property market has traditionally been “top heavy” in building a higher proportion of luxury properties than in other cities in the world. This was due, he argued, to the commodity boom that took place between 2002-12.
“That oil boom had beneficiaries in the region, in countries like Russia and some North African countries. That boom then fed into luxury properties. You had a lot of holiday homes and an investor effect that was coupled with a dollar that was weakening.
“It wasn’t just Dubai – you saw it in Spain, in America and in Egypt.”
He said this trend has started to reverse more recently as developers cater more to UAE residents by providing more affordable property. For instance, some 77 per cent of existing villas are priced in the Dh2 million and above bracket, but 63 per cent of all villas currently under construction in Dubai are being sold for between Dh1m and Dh2m.
“You’re seeing a structural shift,” he said.
Speaking at the launch of CBRE’s Dubai Annual Market Update last week, the firm’s UAE head of research and consultancy, Matthew Green, said that many developers who had operated at the premium end of the market “are now starting to try and squeeze construction costs and deliver a product that is maybe slightly cheaper to build” to appeal to a wider group of buyers.
CBRE is predicting that 70,000 units are due for completion in Dubai over the next three years.
“With so much competition between multiple, master-planned developments and everyone with the same view that they need to deliver product in time for [Expo 2020] the residential space has become increasingly competitive,” he said.
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