Dubai - A City for the Rich?Posted on: 7th September 2017
Dubai is no longer a city just for rich people.
As the unstoppable effects of globalisation continue to spread across continents, countries, and cultures, so too it has reached these shores. Most notably, the emergence of Chinese and South Asian middle classes from the smothering swamp of poverty has boosted economic growth everywhere around the globe.
The socio-economic status of the middle classes represents the goal of the world’s 1.2 billion people (22%) who currently live below the poverty line of $1.25 a day. It remains one of globalisation’s greatest achievements despite the many controversies of its impact particularly on unique cultures.
Dubai was ready to absorb and amplify the positive effects of globalisation due to its vision and far-reaching plan to build a modern city capable of ensuring sustainable growth. Its massively successful infrastructure projects – excellent road and motorway network, Metro system, beautification projects, the recently opened Dubai Canal, and world-class seaports and airports – combined with an effective regulatory framework and political governance have produced a truly global city which is expected to house 5.2 million residents by 2030 from its current population of 2.4 million.
Many large cities struggle with managing their growth – for example, Mexico City, Lagos, and Mumbai – and the result, especially observed in times of natural calamities, can be devastating.
Dubai has largely avoided calamitous outcomes through its fortunate geography (meeting point of three continents and plenty of desert space to grow) and good planning.
And this is particularly seen in Dubai’s property market where the middle classes including those from the emerging economies are investing in their droves.
For example, over the past 18 months, South Asian investors from India and Pakistan contributed almost 20% of the total Dh151 billion worth of Dubai property investment from January 2016. Chinese investors came in eighth in the nationality rankings, adding Dh3.1 billion (2%).
There is now an increasing amount of middle ground property available for middle class buyers.
Whereas 10 years’ ago in Dubai, I was selling property in a range of Dh1 – 5 million, today the range predominantly sits between Dh600,000 to Dh3 million.
The luxury market is still there but the real growth has been identified by developers in the ‘sweet spot’ of circa Dh1000 per square foot for both off-plan and re-sale properties with total off-plan sales to date in 2017 surpassing the entirety of off-plan sales in 2016.
The reasons for this growth are obvious – cheap, affordable and flexible mortgage finance, the many advantages of Dubai that facilitate middle class living, and a stable workforce – means that many singles and families earning Dh20,000 a month tax-free can now afford to buy rather than rent. It makes sense when many couples are having to pay an annual rent of anywhere between Dh80,000-Dh120,000 for a one-bedroom apartment – why not invest this outlay in a mortgage?
There is another factor at work here too. The population – both local Emirati and expat – is becoming more educated. White-collar jobs, once exclusively reserved for the educated European elites, are now populated with a diverse range of nationalities. This information/tech-savvy and wealthy generation just loves Dubai – and they are now putting their money where their hearts are - into a city that continues to ignore global headwinds and defy economic logic, to confidently mark out its place in the world.
Come to Dubai where everybody is welcome!