Bringing back old statistics

This June, one report set the UAE real estate market ablaze.

This is a report that many people are familiar with, as it has been introduced in various economic newspapers and on YouTube. It is a list of millionaire immigration/migration (outlow/inflow) announced by Henley & Partners, a British investment immigration consulting firm.

This is a ranking of countries where immigration/migration is expected to occur the most, based on cases where wealthy people with liquid investable assets of more than $1 million stay in another country for more than 6 months. Korea (1,200 people) is expected to come in 4th place, following China (15,200 people), the UK (9,500 people), and India (4,300 people).

In the case of China, it is a well-known fact that many companies are hoping to relocate overseas due to Xi Jinping's 'joint wealth' policy, the issue of Hong Kong's autonomy, and the Alibaba incident. The prediction that is prevalent among the Chinese upper class and local businesspeople is that Xi Jinping's China will intensify tensions surrounding the annexation of Taiwan around 2028. Many companies are currently inquiring about relocating overseas due to concerns that China will be subject to various international sanctions due to the cross-strait issue, just like the Russia-Ukraine War. Among local Chinese, the trend that previously favored Hong Kong is now turning to Dubai via Singapore, which is saturated. In the case of the UK, India, and Korea, there is a strong tendency to avoid increased taxes. In addition, the trend of asset relocation is also playing a role due to signs of a slowdown in the domestic real estate market.

The United Arab Emirates (UAE) is expected to host the world’s largest number of wealthy immigrants for the third year in a row, with 6,700 by the end of 2024. If each of these immigrants were to buy a single home, they would account for 25% of the total supply in the UAE in 2024.

The reason I brought out the old statistics again is because I wondered if the report's predictions were correct around November, the end of the year. There are too many people asking about investment intentions to wait for new data for next year. Our opinion is YES. The British people, Korean acquaintances, and Chinese customers I met at various meetings are very positive about investing in the UAE. An acquaintance invested and the results were good, so three more people expressed their intention to buy, and the demand is increasing exponentially.

Statistics are retrospective, but I looked back at the report to see if it was going as expected when the champagne was popping like it is now. I quoted the data for September of this year from the monthly report of DXB interact published by the Dubai government at the end of last month.

For the first time in all the figures that showed price increases in the past two years, the average Villa price recorded (-)5.7% YOY. However, this is the average price of 2,935 units traded in September and it can go up to AED 4M when there are many high-end villas sold, so it is not a significant figure. You can just think that there were many low-priced villas sold in September. I was worried and checked all the other reports.

The price fluctuation comparison between Q2 and Q3 in 2024 showed -0.2% for the first time in several years. It is almost negligible, but it is surprising that it is red. It has been several years since this has happened. (The total amount of mortgage applications has also decreased, but it is omitted because it does not seem to have much correlation with the real estate initiative.)

Although it is a level that can be ignored because there is a seasonal trend where transaction volume decreases and prices are formed lower than the annual average in the hot summer, we have also confirmed that the increase in commercial office rent prices has slowed down and started to fall slightly since last year. (omitted for space reasons)

We need to look into it further to understand why, but our guess is that while there have been many transactions for actual immigration, business relocation, and actual residence by immigrants over the past two years by end users, there are now more speculative investments. Could it be that the actual decrease in commercial office transactions and the decrease in average rent prices is because office transactions proportional to the actual immigrant population are not confirmed? I think residences are still strong while commercials are falling due to the flow of people trying to move funds to Dubai for Golden Visas or domestic economic situations. The important thing is that this is the first time since 2022 that we have confirmed a decline. It could rebound in Q4, but we think the Dubai real estate market may have started to catch its breath a little. At least for commercial real estate.

While everyone is talking about the market rally, I still want to take a look around once again.

It may be a warning that breaks the recent upward trend, but the recent signs of sluggishness in commercial real estate and the slight decline in average prices in Q3 are not significant figures that can change the overall economic trend of Dubai, but I would like to confirm whether the turning point has passed. I will share the next report when it comes out.

thank you