Sudden Surge in Dubai Property Prices Causes Russians to Lose Interest in Dubai Property!

Real estate brokers say that Russian real estate purchases in Dubai have slowed down over the past few months, following a year that saw the ruble lose a quarter of its value and a natural dip after a year of rapid buying in the aftermath of the Ukraine invasion. According to brokers, some Russians who resettled in Dubai decided that Dubai simply wasn’t for them, and they moved elsewhere. Real estate in Dubai has long been popular with Russians, who flocked to buy property in the United Arab Emirates in 2022 as international sanctions hammered Russia’s economy and finances in the wake of the country’s annexation of Ukraine. The real estate boom in the UAE since the start of the pandemic has boosted home prices by around 30 percent between January and September 2022, according to data compiled by CBRE Group.

According to one luxury real estate broker, Russians are net sellers at their Dubai-based firm, either repatriating funds after making large profits on the country’s hottest property market or walking away from deals they can’t afford. “It’s profit-driven,” Driven Properties (Driven Properties) founder Abdullah al Ajaji said. “From June to August, our Russian clients bought a total of $54.5 million in real estate and sold a total of $276 million in real estate.” Emaar Properties (Emaar) PJSC (Dubai’s largest developer) says that Russian real estate purchases totaled $54.5 billion in the first six months of 2023.

Then, in the last few months, there was a pullback, brokers reported, with fewer buyers showing up with Russian passports or from proxy countries such as Cyprus/St Kitts/Malta. According to Better Homes, in the third quarter of 2023, Russians were the agency’s fifth largest foreign buyer of residential properties in Dubai, down from number one in the same period last year in terms of transaction volume. This was the first time Russians had fallen below the top three since the second quarter of 2022.

There are several reasons for this, he said between meetings at DRVN’s artificial island cafe. “The first is that people have money that they bought last year,” Al Ajaji said. “It’s just a natural decrease in demand.” He also said that some Russian banks independently reduced risk by cutting off money-transfer options to all but the top clients or limiting the amount of money that could be sent each month. Another reason is that some Russian buyers are looking to walk away from deals when the last set of payments turns out to be much larger than expected. In rapidly expanding Dubai, buyers typically put 10-20 percent down on properties before construction. Many Russian clients who have purchased three or four units that can still make a profit on the stakes are looking to sell them, Jalili said. In some instances, Russian buyers have been selling the stakes at a loss, or even defaulting, according to Al Ajaji.

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