As Dubai property market rebounds, Nigerians among top foreign investors

•Records 90,881 residential transactions in 2022
•Why market appeals to high-net-worth individuals, by experts

Despite sluggish economic outlook globally, high-net-worth individuals including Nigerians have continued to invest in Dubai, which boosted the luxury market and saw a record 90,881 residential transactions in 2022, exceeding the historic high of 81,182 in 2009.

Report by a global commercial real estate services and investments firm – CBRE, stated that the total volume of transactions in Dubai reached 8,662 in December 2022 – a growth of 63 per cent from the previous year. This was supported by a 92.5 per cent increase in off-plan sales and a 35.4per cent jump in secondary sales.

Dubai’s residential market saw a number of records being broken over the course of 2022. Residential transactions volumes beat the 2009 high by almost 10,000 transactions. Residential rental growth also reached historic levels, with apartment and villa rents increasing by 27.1 per cent and 24.9per cent, in 2022, respectively.

The report pointed out that average property prices rose by 9.5per cent in the year to December 2022, while average apartment prices rose by 9.0per cent. Average villa prices increased by 12.8 per cent over the same period. As of December 2022, Dubai’s average apartment prices reached $318 per sqft and average villa prices reached $377 per sqft.

These average rates have not yet surpassed the record highs of 2014, with the average apartment and villa prices being 21.5per cent and 4.2per cent below this peak. In the apartment segment of the market, Jumeirah has registered the highest sales rate per sqft at $632, whereas, in the villa segment of the market, Palm Jumeirah registered the highest sales rate per square foot at $1,067.

In the year to December 2022, average rents increased by 26.9per cent. Over this period, average apartment and villa rents increased by 27.1per cent and 24.9per cent, respectively. The Palm Jumeirah recorded the highest average yearly apartment and villa rents, with asking rents reaching an average of $67,644 and $277,000 per annum, respectively.

According to a survey by JLL, one of the primary factors that made Dubai’s real estate market perform strongly in recent years was the city’s robust economic growth and development, which has raised demand for residential and commercial real estate.

The government also enacted a number of programmes and rules to encourage foreign investment in the real estate industry, which has contributed to the market’s growth. The Dubai Land Department (2020) reported that the overall amount of real estate sales surpassed AED 257 billion.

In addition, Dubai’s image as a worldwide business and tourist centre, as well as the city’s advantageous tax laws and regulations have contributed to its success in the real estate market.

Nigerians have been known to invest extensively in the Dubai real estate market, and the figures speak for themselves. According to a study by the Dubai Land Department, in 2018, Nigerians placed fifth in terms of the number of investors in the Dubai real estate market, with a total of 1,092 transactions valued at AED 4.6 billion (approximately $1.25 billion) (Dubai Land Department, 2018). This illustrates that even if the number of transactions was not as large as in some other nations, the value of these transactions was still considerable.

In 2019, the Dubai Land Department announced that Nigerians were the second-largest group of foreign purchasers in Dubai’s real estate market, with 1,824 transactions worth AED 7.2 billion (approximately $1.97 billion) (Dubai Land Department, 2019). This is a considerable rise in both the number of transactions and the overall value of those transactions compared to the previous year. These data illustrate that Nigerian investment in the Dubai real estate market is not only considerable but also expanding.

Currently, apartment sales in Dubai are driving the market. Nonetheless, demand for villas and townhouses remain robust. Location, pricing, and amenities may also influence the desirability of various housing styles in the city. Most of properties are also used for multiple use and holiday services.

Real estate experts, especially estate surveyors and valuers, said Nigerians are drawn to the Dubai real estate market owing to its security and being a stable place for investment, the city’s developing status as a worldwide business and tourist centre and the comparatively cheap cost of property compared to other large cities.

The Director, School of Environmental Studies, Moshood Abiola Polytechnic, Ogun State, Dr. Samson Agbato, said: “One factor is the impression of Dubai as a secure and reliable place for investment, which is particularly tempting to Nigerian investors who may be searching for a shelter for their capital.

“ Additionally, Dubai is renowned as a worldwide commercial and tourist centre, and as such, it provides numerous options for Nigerian investors wishing to invest in a city that is not only stable but also developing.”

Agbato, an estate surveyor and valuer also traced the appeal of the Dubai real estate market to the comparatively inexpensive cost of property in Dubai compared to other major cities. “This may make it more cheap for Nigerian buyers to acquire property in Dubai, which in turn leads to better returns on investment,” he said.

He said: “Wealthy Nigerians may be drawn to Dubai real estate investments due to the city’s robust economy, stable political atmosphere, and cutting-edge infrastructure. In addition, Dubai’s prominence as a worldwide business and tourist centre may make it a desirable real estate investment location.

“The city’s tax-free status and absence of limits on foreign property ownership may potentially attract affluent Nigerians. In addition, Dubai’s real estate market is renowned for its strong returns on investment and potential for capital gain, making it an appealing location for international real estate investors.”

The Secretary, Association of Capital Market Valuers (ACMV), Ademola Adetola, said the depreciation of the naira has made high-net-worth Nigerian investors find Dubai as a safe haven.

“Nigerian investors are very significant because of the continuing depreciation in the value of the naira. Informed investors want to forestall value losses in their portfolio and capitals,” he said.

According to him, “the city’s real estate has continued to remain stable and steady, defying global markets slow down and recession trend. Factors such as the recent pandemic, rising taxes, cost of living crisis, natural disasters and the ongoing Russia-Ukraine war, amongst others have tended to push many citizens looking for safety of their families and businesses to migrate to Dubai, which has remained number one destination for high-net-worth migrants.

“Dubai is attractive because the city offers world class educational institutions, healthcare facilities, security and high levels of home ownership among its residents. The city offers one of the best value in global markets for investors, according to the UBS Bubble Index.”

Adetola said the city is less exposed to high interest rates because of the prevalence of cash buyers estimated at more than 70 per cent of purchases (according to Better Homes data) and the city has continued to benefit from higher oil prices, which is currently key driver of global inflation.

Besides, the international nature of the market, he said, making values and prices of properties to rise in the city, yielding a 6.5per cent average rental returns in contrast with situations of meltdown in most other parts of the world.

The Principal Partner, Emeka Okoronkwo & Associates, Emeka Okoronkwo, stated that investments, especially economic are mostly attracted by established and reliable structure. “That is what determines its ability to yield expected returns. The Dubai concept was well thought out, all the funnels that will continue to generate traffic to support and yield expected returns in their real estate sector are functional.

“They have created a world tourism excitement centre with a supportive airline and visa regime and a time-share property ownership structure. A large amount of those investments are from Nigerians, as they retain value over time. It yields adequate returns and offers them a lifestyle they can access in a less difficult way compared to Europe or America,” he added.