How Dubai became a Boomtown

Dubai estate agents have seen a lot over the years — booms, busts, the creation of the Palm Jumeirah and the world’s tallest building, the Burj Khalifa. But nothing compares to a closely guarded document being passed from broker to broker. It’s a swaps list of multi million pound homes in London that Russians are trying to barter for mansions in Dubai in an attempt to circumvent financial restrictions imposed on them since the invasion of Ukraine. One agent who has seen the list says it includes a Belgravia mansion worth £30m and an Eaton Square apartment with a £9m asking price. The trade is morally questionable, to put it mildly, and probably illegal, but it exposes one of the unlikely side-effects of the conflict: the bolstering of a sudden and dramatic renaissance for Dubai. 

Little more than a year ago, the splashy emirate was dismissed as ‘Covid Casablanca’ after it opened up to foreign travel too early. Some 260,000 Britons alone flocked to the desert city state and spread the Covid-19 virus there. Many then brought it back to Britain. Countries raced to put Dubai back on the travel Red List and growth slumped. Today, the city state is booming. Dubai’s economy is growing by a whopping 7% year on year, according to the Dubai Statistics Centre. The upswing has reversed the slump in population sparked by Covid, when many expats, who make up 90% of the population, opted to return to their home countries. 

Between the end of 2020 and April 2022, the population rose by close to 100,000. Dubai’s population has passed the 3.5 million mark for the first time. Population growth is a major goal for the emirate’s government, with a target of 5.8 million people by 2040. The UAE’s refusal to sanction Moscow infuriates western and many other governments but attracting money, no questions asked, has always been at the core of Dubai’s economic model. “Dubai’s competitive advantage is being a place where ‘the normal rules’ do not apply,” says Matthew Page, who studies Gulf economies for the Carnegie Endowment for International Peace. “It’s a pirate entrepôt where all are welcome as long as they help to create wealth, including, now, Russians fleeing financial sanctions.” 

Dubai is also the location of choice for the employees of many international firms who were forced to leave Russia when the war broke out. Goldman Sachs, J P Morgan and Bloomberg are among hundreds of companies that have relocated staff from Moscow to the desert. All the new arrivals need somewhere to live, which is ginning up the property market, the traditional driver of the economy and bellwether of overall economic health.

Dubai’s housing market had its best ever start to the year, according to real estate analyst CBRE. Total transactions reached 19,009 in the first three months of the year, “the highest total ever recorded in the first quarter,” CBRE reports. Average home prices climbed 11.3% in the 12 months to March, CBRE figures show. Apartment prices rose 10% on average and villas surged by 20.2%. Villas on the Palm Jumeirah recorded the highest average price on a monthly basis in March. Belleview Real Estate broke the record for a Dubai property sale after selling a 33,000-sq-ft 10-bedroom villa on the Palm Jumeirah for £58.5m. A three bedroom apartment at the Bulgari Resort and Residences on Jumeirah Bay Island sold for $10.9m — $3,436.88 per square foot. Dubai’s tourism sector, another key engine of growth, has also underpinned the emirate’s economic recovery. 

International visitor numbers have returned to about 74% of pre-pandemic levels. Hotel room rates are the highest since 2018, with average occupancy exceeding 82%, consulting firm STR reports.

Big names have flocked to town. Giorgio Armani hosted his big post-pandemic comeback show, “One Night Only”, in Dubai. (Despite the name, it went on for three days.) Property and tourism have helped the UAE’s non-oil economy to reach its healthiest state since June 2019. The non-oil sector surged in March to its strongest level in 33 months. The headline S&P Global Dubai Purchasing Managers’ Index climbed to 55.5 in March from 54.1 in February. (A reading above 50 indicates economic expansion.) 

What is attracting so many new arrivals keen to visit or to put down roots? Ironically, the main factor is the one that initially threatened Dubai’s future: Covid. A fast vaccine and booster programme, second only to that of Israel, has meant that 95% of UAE residents, including migrant workers, were inoculated last year. The rapid rollout meant Dubai could finally open up safely and do so more quickly than rival global business hubs, notably Singapore, and go on to leverage its traditional advantages: no or low tax, strict social control, a business-friendly time zone, and great connectivity, thanks to Emirates airline. The United Arab Emirates has topped Bloomberg’s Covid Resilience Ranking, a survey of where the virus is being handled most effectively with the least social and economic upheaval. Philippe Zuber, the boss of Kerzner International, best known for developing One&Only resorts, Atlantis hotels and branded real estate, says: “Dubai has struck a good balance between keeping the city open for business and managing public health.” 

New government initiatives have helped. Dubai has started offering investor visas. Wealthy foreigners can easily gain entry thanks to the UAE’s ‘golden visa’ program, which allows long-term residency to foreigners who invest $2.7m in a local company or investment fund. Ten-year ‘golden visas’ are available for entrepreneurs, and retirees can now live in Dubai in exchange for investment in property. This, says Harry Tregoning, who runs a Dubai property consultancy, is proving attractive to Brits struggling to use their European second homes after Brexit. “People who used to spend more than 90 days in their holiday homes in France are now coming to Dubai because they don’t have the limit on how long they can stay that has been imposed since Britain left the EU,” he says. The Dubai government has been luring remote ‘nomad’ workers with residency rights and has reformed company law, removing the requirement for onshore companies to have an Emirati shareholder. Anyone made redundant can now continue living in the emirate for six months to try to find a new job, rather than having to leave within 30 days. 

New moves designed to attract fresh investment include switching from the Middle East’s standard Sunday to Thursday working week to a Monday to Friday timetable. The government also recently decriminalised cohabitation for unmarried couples and the consumption of alcohol without a licence. 

Dubai is now so successful that it is attracting investment from more established business hubs. Veteran emerging markets investor Mark Mobius recently moved his base to Dubai from Singapore after being “disappointed” with the way the Asian nation handled the pandemic. Singapore’s vaccination rate has been far slower than that of Dubai and the city, airport and airlines have remained mired in tests and restrictions. Repeated attempts to open key air corridors, notably between Singapore and Hong Kong, failed. “Singapore has been harmed by what happened with Covid,” Mobius says. “Dubai is beginning to take its place and will probably surpass those two in the next 10 years.