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Dubai vs. Abu Dhabi: In which direction should a luxury home buyer look?

Gain valuable insights on buyer demographics, investment advantages, and emerging trends in Dubai and Au Dhabi for a sound luxury property investment decision

Dubai vs. Abu Dhabi: In which direction should a luxury home buyer look?

The luxury property market in Dubai and Abu Dhabi has been experiencing a boom in recent years, attracting a diverse range of international investors.  Hence, at CW Property Middle East we spoke exclusively to Barnaby Crompton, a real estate expert in Dubai, and Ben Crompton, a specialist in Abu Dhabi, who provide valuable insights into the dynamic real estate market, sharing their perspectives on buyer demographics, investment advantages, and current trends.  This interview explores the unique selling points of each city, along with the evolving regulatory environment and the biggest challenges facing high-end property buyers today.

Can you provide an overview of the current luxury property market in your city and how it has evolved over the past few years?

Barnaby: The Dubai luxury real estate market has changed over the last few years from a market where the returns for a modified or fully upgraded home, or the sale price for a fully renovated home, was not vastly different to the sale price of a standard-finished developer product. Now, those selling well-renovated, or sensitively upgraded homes easily command–and receive premium prices.

Ben: The luxury property market in Abu Dhabi has hugely outperformed all other sectors over the last few years. Only the off-plan market has seen anything like the demand the top end has experienced. It has led the way in terms of price appreciation since 2021.

Who are the main buyers of luxury properties in your city, and have you noticed any shifts in this demographic recently?

Barnaby: The mainstays of luxury property buyers in Dubai have always been Indians, Pakistanis and British, with a few Europeans and some other countries. Due to the war in Ukraine, we saw a huge influx from Russia and Ukraine, which was expected. We have also seen a huge increase in European buyers over the last six months as European countries are going through turmoil, and Dubai has always been seen as a safe haven for people.

Ben: Pre-2021, buyers in this sector were heavily UAE nationals and other Arab entrepreneurs calling Abu Dhabi home. In the last few years, however, we have seen more eastern and central European buyers, who view the capital as a viable alternative investment to Dubai and other global cities.

What makes luxury properties in your city a good investment compared to other global luxury markets?

Barnaby:  Dubai’s luxury property market stands out as an attractive investment opportunity compared to other global luxury markets due to several unique factors. First, its strategic location between East and West establishes it as a central hub for international business and tourism, which continually drives demand for high-end residential properties. Dubai also boasts world-class infrastructure, including state-of-the-art transportation systems, advanced telecommunications, and top-tier amenities, supporting a luxurious, convenient lifestyle that appeals to affluent buyers and investors globally.

Dubai’s low- to no-tax tax environment offers a significant financial incentive, making luxury properties more lucrative compared to markets where capital gains and property taxes can diminish returns. The city’s political stability and innovative real estate projects, which often include innovative architectural designs and eco-friendly features, further enhance its profile as a forward-thinking investment destination.

Dubai’s government also actively encourages foreign investment, providing a legal and regulatory framework that is favourable to international buyers. All these factors combined create a compelling case for investing in Dubai’s luxury properties.

Ben: Luxury property in Abu Dhabi is incredibly well-priced. Oceanfront, full sea-view property can be bought for under US$1,000 per square foot, which is extremely competitive.

What are the most sought-after features and amenities by buyers when they are looking to buy a luxury home?

Barnaby: Luxury property buyers prioritise quality and location over amenities like private cinemas and gyms. While features like private cinemas and gyms are considered ‘nice to haves’, the main focus remains on the overall quality of the property and its location. A poorly finished property or a location that doesn’t meet the buyer’s needs can be a deal-breaker, while the absence of amenities like private cinemas is less likely to deter buyers.

Ben: Location is a key factor for buyers, with views and beachfrontage being highly desired features. Developers are now incorporating community cinemas and co-working spaces along with the usual amenities like pools and gyms to attract buyers.

How do cultural and lifestyle factors in your city attract buyers to luxury properties?

Barnaby: The culture of Dubai is what attracts the wealthy. Dubai has a culture of goodwill, entrepreneurialism and ensuring the security, safety and betterment of everyone, coupled with the ease of doing business here. It’s a city that is easy to do business in and becoming even easier with each decree handed down from His Highness Sheikh Mohammed bin Rashid Al Maktoum.

Ben: Abu Dhabi has seen significant cultural development in the past decade, with institutions such as the Louvre, Sorbonne and New York Universities establishing a presence in the city. Saadiyat Island is a hub for luxury properties and will soon be home to the Guggenheim, Zayed National Museum, and Natural History Museum as well. These developments showcase the Emirate’s commitment to expanding its cultural offerings and attracting a diverse range of visitors and residents.

Can you describe the regulatory environment for buying luxury properties in your city, and how does it impact foreign investors?

Barnaby: The regulatory environment in the UAE has improved since being placed on the grey list. AML and KYC requirements have been made mandatory for all transactions, allowing for the traceability of money. This change has positively impacted foreign investors, as it aligns the UAE with established financial institutions. KYC and AML practices are now prevalent, making the market more transparent and secure for investors.

Ben: It’s continually improving, and many developers are making conscious efforts to attract more foreign buyers. They regularly attend road shows abroad and incentivise brokers to bring non-resident buyers.

What are the biggest challenges faced by buyers today in the luxury housing market?

Barnaby: The main challenge in the luxury property market is finding well-priced properties of high quality. Some investors renovate properties to make a profit, but may not do a good job, yet still expect top prices. However, savvy buyers are not easily fooled by these tactics.

Ben: Abu Dhabi is still a market in its infancy, and the information and assistance available is improving, but slowly. Lawyers are rarely used for purchases, and conveyancing is left to the brokers. Information on past deals is hard to find, and trustworthy and knowledgeable partners are rarer than they should be.

What trends do you foresee in the luxury property market in your city in the near future?

Barnaby: Future trends in Dubai’s luxury real estate market point towards the emergence of pockets of luxury away from the typical upscale neighbourhoods like Palm Jumeirah and Emirates Hills. Areas like Al Barari and Tilal al Ghaf are gaining attention from luxury buyers, signalling a shift towards more ‘off the beaten track’ locations. As centrally located land becomes more expensive, smaller pockets of luxury are expected to spring up throughout Dubai, catering to high-end buyers looking for exclusivity and unique investment opportunities.

Ben: Abu Dhabi is proactively seeking new investments in the Emirate. The oil price has been stable for a long time, and it has been successful in marketing itself as a viable alternative to Dubai for wealthy expatriates. More projects are launching, and uptake has been consistently excellent.

What advantages does your city offer over the other (Abu Dhabi vs. Dubai) for someone looking to purchase a luxury property?

Barnaby: Dubai and Abu Dhabi have successfully established their own unique identities within the UAE market. While Abu Dhabi focuses on cultural experiences with attractions like the Louvre and Zayed National Museum, Dubai stands out as a bustling business hub and popular tourist destination. Dubai offers a wide range of activities such as visiting the Burj Khalifa and the Palm Jumeirah, making it a fun-filled destination. On the other hand, Abu Dhabi is more culturally inclined with its emphasis on museums and cultural sites. Overall, Dubai is seen as more fun, while Abu Dhabi leans towards cultural experiences.

Also, prices in Dubai are significantly higher than in Abu Dhabi, as the most expensive house for sale in Abu Dhabi is priced at 85 million dirhams. In contrast, there are over one hundred properties in Dubai selling for 85 million dirhams or more. This indicates a significant disparity in property prices between the two cities.

Ben: Abu Dhabi has consistently been the mature older brother to Dubai’s brash and glitzy persona. Abu Dhabi appeals to those looking for a quieter life, more privacy, less hustle and bustle–more culture than pizzazz.

Based on your experience, what is the one piece of advice you would give to someone considering a luxury property investment in your city?

Barnaby: When buying super prime or luxury properties in Dubai, it is crucial to choose a trusted and experienced broker to represent you. By allowing them to understand your needs and shop the market on your behalf, they can make the process of buying much smoother. Good agents will work diligently to ensure you find the right property at a fair price, as they are paid based on their success. By working closely with your broker and following their advice, you can eliminate the stress and uncertainty of the buying process.

Ben: When considering a new real estate investment, it is important to research recent sales in the area to determine accurate pricing. Sellers may struggle to set the right price for their units, so it is crucial to verify the numbers. Look for what has sold most recently and at what price to guide your decision-making process. Double-checking this information can help ensure you are making a sound investment.