Economy Costs rise, but no fears of a crash for Dubai’s super-rich By Gavin Gibbon June 20, 2023 Reuters The UAE had the highest net inflow of millionaires in the world in 2022 Dubai is 7th most expensive city in world for HNWIs City is dearest place to buy 8 out of 20 index items Emirate saw highest rise in prime residential real estate prices Dubai has surged up global cost of living rankings for the super-rich, but a leading Swiss wealth management group has no concerns the emirate could be headed for another economic crash. Dubai is the seventh most expensive city in the world for high net worth individuals (HNWIs) to live – ahead of European cities Paris and Zurich, according to the fourth edition of Julius Baer’s Global Wealth and Lifestyle report. The city ranking is based on the Julius Baer Lifestyle Index, which analyses the cost of a basket of goods and services representative of “living well” in 25 prime cities around the world. Rich Indians lift UAE to top of millionaire migrants chart Saudi Arabia tops regional billionaires list Sharjah has world’s second-largest growth of millionaires “Dubai has been the star performer, vaulting into the top ten for the first time,” Fahd Abdullah, executive director at Julius Baer Middle East, said. While he is confident Dubai can continue on its upward trajectory, he does not expect a repeat of 2008-9 when the emirate entered a period of economic slowdown after the global financial crisis spurred a dramatic slump in real estate prices. “Household balance sheets are quite strong,” Abdullah said. “We speak about high net worth individuals in the report, but, more generally, coming out of this pandemic extra savings are quite high, banks are doing well and we are seeing growth trends prevail.” As wealthy residents spend more to maintain their lifestyles, Dubai became the most expensive city in Europe, the Middle East and Africa for eight out of the 20 index items across fashion and luxury accessories with the cost of a ladies handbag up 13 percent. Globally, the report found Dubai is also the second most expensive city for luxury watches. UnsplashDubai is the second most expensive city in the world for luxury watches The research also revealed that prime residential property in Dubai rose by 44 percent. This was the highest increase across all cities monitored, but Dubai still remains affordable on a global scale, ranking 14th out of 25. “It’s an open cosmopolitan city ranked as one of the safest and easiest to do business with what is ostensibly, when compared to other major cities, an undervalued property market,” Barnaby Crompton, a super prime property broker and partner in Crompton Saltini Real Estate, said. According to a survey report from Knight Frank, global HNWIs have a combined $2.5 billion to spend on Dubai real estate this year. That is slightly down on the $3.8 billion spent on homes costing more than $10 million in the emirate in 2022. The report from Julius Baer also showed that fine dining prices increased 186 percent in Dubai, as the city’s hospitality and tourism sectors continue to enjoy a strong post-pandemic rebound. Naim Maadad, founder of Gates Hospitality and a board member of UAE Restaurant Group, told AGBI that costs have increased “on all fronts”, including the price of raw materials, services, real estate and inflation. “Like any opportunity, one needs to be cautious not to out-price services and make sure longevity and sustainability are kept in check,” he said. Air fares Another area of interest was the cost of a business class flight in Dubai, which fell by 8 percent over last year. Across the Middle East region, 62 percent of respondents to the Julius Baer survey spent more in the past year on travel for leisure and work. “We see the continued blurring of lines between work and leisure," Linus Bauer, managing director of Bauer Aviation Advisory in Dubai, said. “Prior to the pandemic, passengers were typically classified into two categories: business and leisure. This isn’t the case any more and the younger generation are living up to that trend.” Millionaires The UAE had the highest net inflow of millionaires in the world in 2022. Last year, 5,200 more HNWIs relocated to the Emirates than left, according to the Henley Private Wealth Migration Report. The study forecasts a net inflow of 4,500 HNWIs – people with wealth of more than $1 million – to the UAE in 2023. Abdullah said its friendly tax regime, high standards of living, global connectivity and infrastructure all served as strong reasons for HNWIs to make Dubai their home. “The outlook for Dubai is quite rosy. It should remain a strong fixture in the higher end of the rankings,” he said. Singapore topped Julius Baer’s city rankings, while Asia remained the most expensive region for the fourth year in a row.