Real Estate

Russians bucking trend in Dubai with bigger, pricier homes

July 27, 2023, 3:18 AM

Russian investors and developers are buying up rows of villas and homes in Dubai to rent to Russian nationals

Russian buyers of Dubai real estate were 3rd largest nationality in Q2
Average spend on a home was $1.1m
Tended to buy rather than rent, preferring villas over apartments

Russian buyers are bucking the trend in Dubai real estate and buying bigger, more expensive houses as they make the emirate their new permanent home.

Residential property prices in the emirate climbed at their fastest rate in almost a decade in the first half of this year. Villas topped previous records set in 2014.

Property consultancy CBRE reported that average residential prices in June increased by 16.9 percent year on year. 57,737 deals took place in the first six months of the year, the highest level on record.

Russian buyers have made up a big part of demand, as sanctions imposed in the wake of Moscow’s invasion of Ukraine led them to be locked out of traditional markets in Europe and North America.

Real estate agency Betterhomes reported that in the second quarter of 2023 Russians represented the third-largest nationality of buyers in Dubai. They ranked behind India and the UK and just ahead of Egypt and the UAE.

Akshay Jayaprakasan, an associate partner at research firm Redseer Consulting, carried out a survey of Russian buyers and found differences in their residential buying habits to the majority of Dubai expat residents.

“In the short-term, Russian expats are fuelling the market,” Jayaprakasan said, adding that most are cash buyers, with few needing mortgages.

They are also more likely than their international counterparts to opt to buy than rent. Their average spend on a property is nearly double that of other nationalities, at $1.1 million.

When it comes to the properties themselves, Russians favour villas over apartments, and are looking for new homes ready to move into, as opposed to off-plan or secondary homes.

British real estate expert Barnaby Crompton last year handled the sale of the most expensive property ever sold in the upmarket area of Emirates Hills, for AED210 million.

He has worked with many Russian buyers, and said their motivation for buying is different from other expats, who are here to live short-term or make a return on their investment.

“It’s no secret that they were leaving their home country for security reasons.

"When you’re leaving potentially permanently and you’re going to be moving yourself and your family, it’s more likely to be a villa purchase, so you’re more likely to spend more on it,” he said.

“It makes sense if you’re moving your entire home, rather than buying a holiday home or a temporary residence.”

The UAE had the highest net inflow of millionaires in the world in 2022, with 5,200 more high-net-worth individuals relocating to the Gulf state than leaving, according to the Henley Private Wealth Migration Report.

The study forecasts a net inflow of 4,500 HNWIs – people with investable wealth of more than $1 million – to the UAE in 2023, with a lot coming from Russia.

Alex Galt, founder of Dubai-based Realiste, a platform which uses artificial intelligence to monitor Dubai real estate data, said Russians were still active in the market but their dominance has waned.

“The wave has dried up. Everyone who wanted to has already moved their money to Dubai,” he said.