Portfolio diversification: why Russian developers enter the Dubai market

The year 2022 was distinguished by an interesting trend: Russians began to massively buy real estate in Dubai — demand increased by as much as 84% compared to a year earlier. Russian developers, who are sensitive to market trends, did not lag behind, they began to acquire land plots and simply look at the foreign market. So, at the end of December last year it was reported that major players in the construction business in Russia — "Airplane" and "Pioneer" acquired land in the UAE for their future projects. It is known that Pioneer is going to build a 45-storey residential complex. The plans of the "Plane" have not yet been announced.

Kalinka Group is sure that it is a mass phenomenon that we are talking about. According to their calculations, every second developer in the country was somehow interested in entering the Dubai market. Other experts also agree with them. Specialists of Intermark Real Estate and NEV REAL ESTATE say that they constantly receive requests for advice or purchase of a plot for construction. At the same time, these are often not leaders in construction in Russia, but small companies.

But, of course, large developers also couldn't help but be interested in the trend. In addition to the above-mentioned "Airplane" and "Pioneer", VOS'HOD companies (plans to build a hotel in the Emirate of Ras Al Khaimah), Level Group, O1 Properties, Orange Group and others were actively looking at projects in the UAE.

Probably, they are motivated not only by high demand for facilities, but also by successful projects of other Russian companies. A company from St. Petersburg, Becar Asset Management, has built a coliving in Dubai and is building several more. Forum Group from Yekaterinburg has already sold a complex of business class villas - among them was the most expensive mansion in the last six years in the UAE worth $ 32.5 million. Another positive example is the consulting company RRG. Together with the development company Segrex Development, 9 projects were built, now 3 more are being prepared.

In addition to the obvious reaction to demand, there is another reason for the interest of developers. Experts agree that for many businessmen, the issue of survival is now acute. There is stagnation in the Russian market, the portal "All about Construction" wrote about it. The excitement in the construction market has turned into stomping on the spot, everything is going to the fact that prices should fall, respectively, revenue will decrease. While the Russian real estate market is going through a bad time, and experts give vague forecasts, the prospects in Dubai look much brighter — in 2022, more than 86 thousand real estate purchase and sale transactions were concluded there, while most of the transactions fell on the primary market.

In today's conditions, more and more developers are thinking about portfolio diversification. Dubai's fast-growing market is attractive because real estate there is of interest not only to Russians, but also to residents of other Asian and European countries, therefore, demand will continue to grow. Foreigners consider the purchase of real estate as a profitable way of investing with high profitability and comfortable conditions. You can earn money both on the rental business and on the resale of the finished apartment. Also, property owners can apply for a residence permit, which also stimulates the popularity of new buildings.

Of course, not all developers will be able to conquer the foreign market, which also has its own subtleties and difficulties. Many of them may have to look for local partners to overcome bureaucratic obstacles, and engineering networks that need to be rebuilt due to the increasing workload are also becoming one of the problems. However, a positive example in the market of other Russians who have declared themselves well should inspire other developers. Best-New Building predicts that in the coming years, all companies in the top 10 in terms of construction volumes in Russia will try to enter the UAE one way or another. Later, the competition will become tougher, and it will be pointless for new players to enter the market.