The Wealth Report City Series DUBAI EDITION The local perspective on prime property and lifestyle 00_DWR_Cover.indd 61 22/02/2018 11:15 THE WEALTH REPORT – DUBAI EDITION Welcome to the Dubai Edition Lord Andrew Hay Global Head of Residential [email protected] +44 20 7861 1071 Welcome to the Dubai Edition of The the factors – such as relative aff ordability, Wealth Report, Knight Frank’s annual ownership costs and the infl uence of Contents thought-leadership publication for our currency fl uctuations – that make it so UHNW clients and their advisors. attractive to wealthy residents from across 01 Dubai’s rising global standing is the United Arab Emirates, the wider Briefi ng undoubted, and was confi rmed by the Asian region and even further afi eld. The UAE is now ranked 21 out of Bureau International des Expositions’ Findings from previous editions of 190 countries in the World Bank’s decision to award the World Expo 2020 The Wealth Report have confi rmed Ease of Doing Business index. to Dubai, making it the fi rst city in the that lifestyle is a critical issue driving Why is the country fast making Middle East to receive this accolade. investment into residential markets its way up the list? This publication not only builds on globally. We consider place-making, page 02 the research and insight Knight Frank architecture, art, health, sport and the provides every year in The Wealth Report, fl ourishing food scene in Dubai to provide 02 but also aff ords a deeper, more localised a rounded view of the opportunities it Living focus on the issues that matter to off ers to residents, investors and visitors. From fi ne dining to world-class investors, both domestic and overseas. We have also assembled an impressive entertainment, art to getting active, It confi rms recent market trajectories and array of experts, who help untangle the we look at why Dubai is climbing the investment drivers, but also forecasts latest developments in three critical ranks of cities attracting High-Net- future trends in and attractions of this areas for residential buyers: residency Worth Individuals leading Middle Eastern destination. permits, taxation, and school and page 16 Knight Frank’s growing market university options. 03 strength in Dubai means we are able to Wherever you are based, or have provide a comprehensive view of the invested in the past, I hope you enjoy the Insight NOW AVAILABLE economy, investment opportunities, Dubai Edition. I am sure you will fi nd it What are the big things to consider lifestyle and the residential market in an invaluable aid to your investment when setting up home in Dubai? The defi nitive analysis on global what is considered by many to be decisions as you plan for the future. Our three experts on immigration, tax and fi nance, and education a critical global city. Our residential and commercial wealth and investment trends cover the need-to-know basics Our Dubai-based research team property teams are available to discuss page 30 provides a detailed view of where your requirements, whether in Dubai or Dubai sits in the world ranking of prime any of the key global markets we cover residential markets, examining some of via our worldwide network of offi ces. FLIGHT TIMES TO DUBAI The global perspective on prime property and investment 1 Riyadh = 1hr 45 mins 2 Delhi = 3hrs 50 mins 3 Frankfurt = 6hrs 10 mins THE WEALTH REPORT 2018 REPORT THE WEALTH The global perspective on prime property and investment 4 Bangkok = 6hrs 40 mins 5 London = 6hrs 45 mins THE WEALTH REPORT 2018 THE WEALTH 6 Singapore = 7hrs 25 mins The global perspective on prime property and investment 7 Hong Kong = 9hrs 0 mins THE WEALTH REPORT 2018 THE WEALTH 8 Cape Town = 9hrs 35 mins 9 Shanghai = 10hrs 10 mins 2018 10 12th Edition Tokyo = 11hrs 50 mins 2018 12th Edition 2018 11 New York = 12hrs 30 mins 12th Edition 12 Sydney = 14hrs 20 mins 13 Los Angeles = 16hrs 0 mins Source: Sabre KNIGHTFRANK.COM/WEALTHREPORT 02 BRIEFING THE WEALTH REPORT – DUBAI EDITION 03 TAIMUR KHAN SENIOR ANALYST Key topics 01 Prime prospects With excellent investment opportunities on offer in Dubai and stabilising property prices, it is a wise time to enter the market page 04 02 Growing up The emirate’s population has grown rapidly in the past decade, and as it continues, so too does the economy in general page 06 03 A city on the move His Excellency Mohammed Al Shaibani talks Dubai’s future innovations as it strives to become the world’s smartest city One to watch page 10 Dubai’s residential market has moved new build delivery. A high volume of 1.2% year-on-end. Established prime through a number of phases over the new supply, notwithstanding Dubai’s areas such as Emirates Hills, The Lakes, past fi ve years. Strong price growth was population growing 76% over the Palm Jumeirah and Downtown Dubai replaced by price falls, but the latest data past 10 years, outpaced demand. have continued to attract occupier and points to a recovery in demand and the Currency has also been a factor. investor interest. We expect demand in beginning of a new pricing cycle. Between June 2014 and January 2016, the these areas to strengthen, underpinned While annual growth rates averaged Emirati dirham (which is pegged to the by infrastructure investments. 14.4% between 2012 and 2014, the market US dollar) appreciated by 21% against its Examples include Nakheel Mall and experienced a slowdown from the global peers, which made property amenities such as restaurants and beginning of 2015 – with prime prices more expensive for international buyers. entertainment facilities, as well as the falling 5% in 2017. Despite recent price falls, average expansion of Dubai Mall and other This shift in performance occurred prime prices in Dubai as at Q4 2017 were projects that will enhance connectivity largely due to the introduction of a range still 6% higher compared with the same around the Downtown area. of mortgage regulations (loan-to-value period in 2012. There were tentative signs The proximity of these locations caps and the introduction of debt-burden of a recovery in the prime market in 2017, to the new developments being prepared ratios) in October 2013 that were designed with transaction volumes in Q2 and Q3 for Expo 2020 should help to underpin to ensure long-term market stability 2017 recording increases of 6.6% and 5.7% a gradual price recovery in prime and to discourage property speculation. respectively – the fi rst consecutive annual residential markets. We expect this will An additional factor that contributed increases since Q2 2013. In the fi nal be spurred by the weaker Emirati dirham, to prices softening was over-optimistic quarter of 2017 transaction volumes fell which depreciated by 6.8% in 2017. CUMULATIVE PRIME PROPERTY PRICE CHANGE DUBAI PRIME RESIDENTIAL PRICE INDEX 2010-2017 Q4 2012 – Q4 2017 for the key four submarkets in Dubai Data to Q4 2017 146 Palm 141 4% 137 Jumeirah 133 127 119 Downtown -13% Dubai 103 Emirates 15% 94 Hills The Lakes 22% 2011 2015 2010 2012 2017 2013 2014 2016 Source: Knight Frank Research/REIDIN ANDREA MANZATI ANDREA 04 BRIEFING THE WEALTH REPORT – DUBAI EDITION 05 CURRENCY MATTERS THE NUMBER OF SQUARE METRES US$1M WILL BUY IN... Prime Dubai residential price Based on prime residential prices change allowing for market and as at Q4 2017 currency movements Annual change to Q4 2017 Monaco 16 Prime Dubai -5.0% Chinese renminbi -10.9% Hong Kong 22 Euro -16.5% New York* 25 Indian rupee -10.7% Prime Pakistani rupee 0.7% London 28 prospects Russian rouble -10.4% Singapore 39 Dubai has rapidly emerged as the leading British pound -13.1% gateway city in the Middle East, acting Geneva 41 as a hub between Europe and Asia GETTY IMAGES/TOBIASJO Source: Knight Frank Paris 46 Dubai’s strategic location, the availability dirham) and the introduction of stringent In the fi ve years to Q4 2017, the Knight For the same budget, Dubai off ers Sydney 48 of an independent judicial system mortgage regulations. Despite the recent Frank Prime Global Cities Index has a generous 138 square metres and regulator and rapidly improving slowing in market performance, if we recorded annual average growth rates of prime property. Many key global infrastructure has helped the emirate take a longer-term view, the emirate has of 4.6%; Dubai’s prime market recorded residential markets have experienced Shanghai 54 become the dominant regional business experienced strong growth. annual average growth rates of 3.7% rapid reform of property taxation over location. These factors have contributed Over the fi ve-year period to Q4 2017, over the same time period. recent years, with additional purchase Los Angeles* 58 to the UAE being ranked 21 out of 190 prime prices in Dubai have risen 6.1%. Despite this long-term performance, taxes and levies directed at foreign buyers. countries in the World Bank’s Ease Whilst Beijing (85.7%), Vancouver Dubai remains relatively aff ordable Dubai has no such additional levies and of Doing Business index. (67.0%) and Sydney (61.5%) have seen on a global basis. Knight Frank has operates as an income and capital tax-free Beijing 66 As we note earlier in this report, strong price performance over this analysed the amount of prime residential system, encouraging buyers from an Dubai’s residential market has period, Dubai’s performance sits in line property that US$1M will buy in key increasingly diverse range of countries.