Ultra-wealthy residents of Dubai will grow by 60% over the coming decade, refueling the currently depressed luxury property market there, according to a report released Wednesday by Knight Frank.
The city’s ultra-high-net-worth population—those worth over US$30 million—is expected to bloom thanks toDubai's foundation as a Middle Eastern hub for corporations and strengthening ties with China. The city already has one of the highest concentrations of millionaires in the Middle East—they account for two-thirds of Dubai’s population, according to the report.
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The research on Dubai is part of the global brokerage’s annual "Wealth Report," covering trends in the living and buying habits of the world’s wealthy.
Since 2014, global and local factors have held Dubai’s prime property market back despite the large population of well-heeled buyers. The oil-price meltdown paired with stricter mortgage regulations and an oversupply of luxury development have caused several years of declining prices in the city. In 2017, prime prices fell 5%, according to Knight Frank.
But recent data points to the beginnings of a recovery, as prime prices bottom out and the government logs increased activity. Luxury transactions were up 6.6% in the third quarter of 2017 and up 5.7% in the fourth quarter, according to the report.
The predicted increase of wealthy residents, particularly a cohort of Chinese, in the United Arab Emirates is expected to help turn around the slumped luxury market in Dubai.
Over the past two years, the Dubai Investment Development Agency has forged closer commercial relations with Shanghai—bringing the wave of new ultra-wealthy in China to Dubai. The number of Chinese worth more than $30 million has nearly quadrupled over the past decade, according to the report.
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Where will the newest wealthy live?
Established luxury neighborhoods in Dubai include the man-made archipelago Palm Jumeirah, Downtown Dubai—home to the Burj Khalifa— as well as Emirates Hills and The Lakes, according to Knight Frank. New infrastructure near these prime hubs is expected to strengthen their desirability and improve prices.