Although luxury real estate in the UAE underwent a stormy few years after the financial crash of 2008 and the oil price plunge of 2014, the future is looking good. Though appreciation could best be described as stable, expats are flocking to the area, particularly the capital Abu Dhabi and new construction is booming.
The city, which sits on an archipelago in the Persian Gulf, off the coast of the Arabian Peninsula is made up of 80 percent expats for a reason — low taxes, or rather no taxes. Foreigners, reflected in the city’s cultural diversity, pay no income, capital gains or inheritance tax. For Brits, there’s an added bonus: a tax treaty signed between the UAE and the UK in 2016 means that UK pension holders over the age of 55 living in the Emirates can withdraw their entire pension tax free providing they have living in the UAE for at least 5 full tax years.
This has caused a boom in wealthy foreigners looking to call the place home and keep their tax dollars/pounds in their bank accounts. Property broker JLL estimates that as many as 34,000 homes could be completed in 2018 with another 28,000 due in 2019.
Much of the exuberance is due to Expo 2020, a global destination for new ideas and innovation (business, transport, sustainability). A world expo happens once every 5 years and lasts for 6 months. An expected $8 billion is being spent on Expo related projects driving a infrastructure boom, with $2bn-$4bn invested in developing the Expo site. The event is expected to attract up to 300,000 visitors a day when it opens. Standard Chartered, the international bank, has predicted it will also create around 300,000 new jobs and attract new residents in the emirate city, which currently has a population of three million.
"Expo2020 will undoubtedly increase global interest in the UAE, with the eyes of the world focusing again on the incredible development of the country," said Andrew Cummings, co-founder and managing director of LuxuryProperty.com.
Whether the Expo has a long-term effect on real estate values and investment, however, remains to be seen. If the last few Olympics are anything to go by, it’s effects at the residential end tend to be short-lived.
Of greater appeal to wealthy expats looking to call the UAE a second or even first home is the climate. It’s built on a desert so it never rains, which is good and bad. Bad for natural vegetation and water supply, good for getting a tan. To quote the Financial Times, “at just 75mm, the average annual rainfall in the desert would barely fill a coffee mug.” Winters are warm but summers are blistering meaning long months inside air-conditioned buildings is a must.
Luxury condo residences tend to be within larger business and retail centers such as the popular condos offered at the Four Seasons Hotel Abu Dhabi, (still under construction) within the Al Maryah Island development. Online searching showed a number of new single family homes priced with the $5 million to $20 million range. At the private Zaya Nurai Island, modern upscale residences, such as the Water Villa, offer a lifestyle that exemplifies the pinnacle of real estate here.
With prices in the UAE recently edging up and the the area making great strides to establish cultural attractions such as the Louvre Abu Dhabi, the largest art museum on the Arabian peninsula and a sister to the Parisian landmark, which recently opened its doors, real estate professionals are feeling confident about the city’s lure to investors.
Golf enthusiasts have their choice of three pristine championship courses carved out of the peninsula’s sand dunes: Abu Dhabi Golf Club, Saadiyat Beach Golf Club and Yas Links Abu Dhabi. Soccer is also extremely popular in Abu Dhabi with a number to professional teams playing in newly built stadiums and top European clubs starting soccer schools in the area for young players. Buoying this is a new U.A.E. backed program offering potential buyers the opportunity to extend their visa by 10 years with a property purchase, which could have a huge impact driving sales and rental prices upward.
"Whilst we anticipate an increase in interest in real estate, the real boost to the sector will come [...] from the governments recently announced changes to regulations that will permit 10-year investor visas and 100% foreign ownership of companies" said Cummings. "We have already seen an uptick of interest in the market since the announcement and expect this to increase as implementation of the regulations come into effect."