House prices in Dubai are rising at the fastest pace in the world following an influx of Russian money.
High levels of immigration mean average prices in the Gulf emirate have soared by 15pc between mid-2022 to mid-2023 when adjusted for inflation, according to UBS.
The rapid growth was the steepest pace recorded out of 25 major global cities analysed by the investment bank.
Prices in Dubai grew at more than twice the rate recorded in Miami, the city with the second fastest growth.
Local agents said a flood of Russian buyers in the wake of the war in Ukraine has been a defining factor behind the boom.
Dubai has not followed the Western sanctions regime imposed in the wake of Russia’s invasion of Ukraine, meaning it is one of a few global cities that is still a safe haven for oligarchs.
Fadi Moussalli, at JLL property consultants, said: “One of the factors that exacerbated the growth is the influx of ultra high net worth Russians and also ultra high net worth Ukrainians.”
UBS said: “Residential transactions have gone through the roof.” There were 11,328 residential transactions in August, up 22pc year-on-year and the second highest monthly total ever recorded in the emirate.”
Half of residential buyers are from overseas, according to CBRE, and around 15pc of the total market is Russian buyers.
Nicholas Maclean, CBRE’s managing director in the Middle East, said: “The three largest markets appear to be Russia, India and other parts of Europe collectively.”
Mr Moussalli said wealthy Russian buyers were having a particular impact on prices. He said: “It started at the top end, with super high end luxury villas and apartments being taken up for rent or sale. Then there was a contagion effect and now it is generalised across the market, including the lower end.”
He added: “If you just walk on the beach or go to a hotel, you can see there is a big minority of Russian citizens residing in Dubai.”
Mr Moussalli said high-end shops in Dubai had been actively hiring Russian-speaking staff to court the new wealthy clientele moving into the city.
Beyond offering a haven to Russians, many people have flocked to Dubai thanks to its low taxes and the rise of remote work.
Mr Maclean said: “We’re seeing people from Europe coming here because they don’t like their current personal tax rates or because they are worried tax rates will go up over the next few years.”
Dubai has no personal income tax. The government has introduced a series of visa programmes since the pandemic with looser residency requirements, making it easier to move.
Despite the recent surge in house prices, Dubai property is still 25pc below its 2014 peak in real terms. In London, UBS found house prices have slumped by 14pc in real terms over the year to June.
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