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At a Tikki-themed bar in Dubai early last year, a man claiming to be a Scandinavian real estate millionaire ordered a round of tequila cocktails while shouting his formula for success (“fame, power and money”) in my ear. . His companion, a blonde stewardess, fell off the stool.
This absurd moment has become a kind of omen. Bona fide millionaires (possibly with some fame and power, but definitely a lot of money) have flocked to the Middle East’s commercial hub over the past year. Wealth advisory firm Henley & Partners My dear that 6,700 millionaires would arrive in the United Arab Emirates in 2024, more than any other global destination.
For Dubai, whose real estate boom and bust is in a unprecedented rallythis is a victory. Dubai, which has long billed itself as a luxury lifestyle destination, “has always wanted to be Monaco and Singapore,” said one banker, “and that is the direction it is heading.” Business owners say the city, once awash with opportunists and dodgy money, now has plenty of real talent and legitimate money.
Thus, Dubai has burst into the millionaire market. But the Monaco of the Middle East may now have to turn its attention to the middle class.
“The arrival of the ultra-rich has created more options for people to spend large amounts of money,” said one expat who recently left for Europe after almost two decades. “But it has also made people feel much poorer.”
Wealthy global citizens filling expensive restaurants and buying beachside villas, plus a flood of workers looking to cash in on Dubai’s boom, have put pressure on the city’s real estate market, causing problems for wealthy families. lower.
Dubai is now the 15th most expensive city in the world to live in, according to a global ranking by consulting firm Mercer, and has the highest cost of living in the region. In 2020, it was ranked 22nd globally. British Moms, an online expat community, estimated last year that a family needed a monthly income of 50,000 AED (about $13,600) to live comfortably here.
The costs still don’t discourage people. Dubai remains a magnet for migrants attracted by the glamour, the absence of income taxes, the glorious winter weather and the stability of the UAE’s 10-year “golden visa” program.
But rising rents are taking effect. Property laws protect tenants from price gouging to a certain extent, but rents have risen so much overall (on average more than 20 percent annually over the past two, according to Mercer) that many long-term residents are turning away. face downward changes. A friend who lived in a garden villa has moved to a one-bedroom apartment.
Dubai’s Land Department acknowledged the increase in housing demand, but said it was monitoring the real estate sector to ensure a balanced housing supply and had taken measures to help residents “from various income groups.”
There is unlikely to be much sympathy for the white-collar workers who benefited handsomely in the past. Renting in Dubai may be more expensive than, say, Paris or Frankfurt, but Mercer data shows it is still generally cheaper than the financial centers of London and Singapore.
“Not everyone can afford to live in Chelsea,” said Dubai-based real estate agent Barnaby Crompton, citing the London market. “There are other areas where the diaspora is moving because the prices are excluding them from the more central places.”
The lowest-paid employees – the drivers, waiters, cleaners and other vital workers who keep the glittering city running – are squeezed into increasingly cramped accommodation on the outskirts or have less money to send home to their families.
Expat message boards show a lot of debate about whether it is still worth staying in Dubai. “Rent and the costs of education, health, etc. make us believe London could be better,” one wrote. “Financially we could break even because of taxes, but we would be with our families and old friends.”
Many come to Dubai with the expectation of finding fame, power or money. The reality, as the recently deceased expat complained, may be different. “Beyond the glitz and glamour, there are a lot of tears and sadness in Dubai.”