What kind of real estate did Russians buy in Dubai and for what

Russians in 2022 became the leaders in buying real estate in Dubai among foreigners. The top five buyers also included the British, Indians, Italians and the French. Back in 2021, Russians were third, behind residents of India and the UK.

What attracted Russians to Dubai and what they bought in the emirate — asked the experts.

Why did Russians buy real estate in Dubai

Realtors interviewed by RBC-Real Estate note the increased interest of Russians in Dubai real estate. According to IntermarkReal Estate, in 2022, the number of transactions that the company conducted in Dubai with Russians tripled. The reason is the country's loyalty to customers from Russia (there are no restrictions and sanctions), a high standard of living and favorable conditions for doing business.

"The UAE has not imposed sanctions against Russians, SWIFT transfers from banks that have not been sanctioned remain available there, and the possibility of direct flights to the country remains. In Dubai, 85% of the population consists of expats, there is all the necessary infrastructure, and the legislative framework is favorable for doing business," Intermark Real Estate partner Irina Mosheva explained. The population growth due to foreigners, the growing number of tourists, the attractiveness of financial infrastructure and taxation for doing business — all this ensures the demand for local real estate for relocation and income generation, the expert added.

The growth in demand for real estate in Dubai in 2022 was recorded in the company PARUS Real Estate. "The UAE market offers favorable conditions for business and relocation, as the state conducts a loyal tax policy for investors and companies that intend to move to the country," explained Marina Shalayeva, Managing Partner of PARUS Real Estate. In addition, according to her, foreigners investing in the UAE economy have the opportunity to get an analogue of a residence permit — Emirates ID.

The high interest of Russians in real estate in Dubai is also noted by experts from Kalinka (the company began operating in the emirate in March 2022). According to their data, the most active period in terms of sales was the fourth quarter of 2022. "The UAE real estate market experienced unprecedented excitement in 2022 and continues to be one of the most popular destinations among Russians. In addition, the country remains apolitical, which is also an important factor for our fellow citizens," said Ekaterina Rumyantseva, founder of the Kalinka real estate agency.

What and why did Russians buy in Dubai

In 2022, many Russians considered Dubai and the UAE as a "spare airfield": real estate in the country was bought for relocation and long-term residence. "Today it is no longer just buying an apartment, but the relocation of capital, family, business through real estate," says the founder of Kalinka.

According to the company, apartments were the most popular among Russians in 2022: their share in total sales was about 70%. This is followed by villas and commercial real estate. Among the most popular locations were Business Bay, Downtown, Dubai Marina. Transactions in the primary villa market were concentrated in the Damac Lagoons project, Jabal Ali First district and in the southern part of Dubai. The average budget for the purchase of Russians in Dubai in 2022 amounted to about 47 million rubles. (2.5 million dirhams). The purchase range was from 9.3 million rubles (500 thousand dirhams) for budget studios to 375.5 million rubles. (20 million dirhams) for premium facilities.

Experts from Intermark Real Estate call the main goals of Russian buyers of real estate in Dubai the withdrawal and placement of capital in safe assets, opening a bank account and obtaining a residence permit.

Another goal of buying real estate in Dubai is the opportunity to earn on square meters. "Most often, Russians chose apartments for investment — about 30% in a check of 20-70 million rubles. and about 30% more in the receipt of 70-140 million rubles. Many investors bought several apartments both in different projects and in floors at once," Irina Mosheva said. According to Intermark Real Estate, prices for apartments in Dubai in 2022 increased by 14-17%, for villas — up to 11%. Now the cost of apartments in the emirate starts from 24 million rubles ($ 350 thousand), villas — from 137.9 million rubles ($ 2 million). And the average check of the transaction that the Russians made is 34.4 million rubles ($ 500 thousand), the company notes.

For investment, Russians were interested in options at the start of sales, hoping to make money on price increases during construction. Moreover, Dubai developers offer interest-free installments until the end of construction. According to PARUS Real Estate, now more than 70% of Russian clients are considering buying two or more properties in the UAE due to the high investment potential. The most popular purchase budget is 70-280 million rubles ($1-4 million).

"There is a demand in Dubai, including for new buildings, which may later be resold with a price increase of 20% to 40%," said the managing partner of PARUS Real Estate. The Russians also considered buying a ready—made business in Dubai - pools of apartments with tenants in tourist areas and a management company that will rent out these apartments. In this case, the yield can reach 8%, Marina Shalaeva added.

Portrait of a Russian buyer in Dubai

Wealthy Russians have become buyers of Russian real estate in Dubai. According to PARUS RealEstate, more than 50% of clients from Russia are businessmen who open companies in Dubai to diversify their business, and many are also looking for offices and relocate some employees. Among the Russian buyers are top managers of companies and IT professionals, Marina Shalaeva said. "The average check for an object in Dubai is quite high compared to other countries currently available to Russians, so the audience here consists of top managers of large companies and owners of medium and large businesses," Irina Mosheva added.

According to Intermark Real Estate, the vast majority of buyers of real estate in Dubai are residents of Moscow and St. Petersburg. There are Russians from other major Russian cities, but the main demand is formed by residents of the two capitals, said the partner of Intermark Real Estate.

According to her, the largest number of transactions in Dubai, as well as in general with foreign real estate, were made by people aged 40 to 60 years. Although in the last two years there has been an increase in the number of transactions with clients up to 30 years. "This trend is present, that is, young people start buying assets such as foreign real estate earlier," the expert added.

Forecast for 2023: Russians' interest in Dubai will continue

According to experts, in 2023, the interest of Russians in real estate in Dubai will continue. In addition to the possibility of obtaining a residence permit and a favorable situation in the country, attractive conditions for buying real estate in the emirate also have this — developers offer high-quality projects with interest-free installments and high profitability, explained Marina Shalaeva. "There is every reason to believe that in 2023 the high demand from investors for Dubai real estate will continue," she said.

Against the background of continued economic instability in neighboring countries, the demand for UAE real estate will remain at a high level and may exceed the record in 2022, Ekaterina Rumyantseva added. Intermark Real Estate adheres to a more restrained forecast. "We assume that the demand in the Dubai residential real estate market will stabilize in 2023, reaching a plateau, without a significant increase in prices," Irina Mosheva said.