Dubai a second-home hub for multi-millionaires
High net worth individuals mostly buy second homes in the Palm Jumeirah, Emirates Hills and Downtown Dubai
Dubai ranks among the top five second home hotspots for the world's multi-millionaires, according to New World Wealth, a wealth research firm.
The number of multi-millionaires in Dubai stood at 8,600 last year compared to 8,400 in 2015. The city has 2,400 resident millionaires and hosts 11,000 multi-millionaires during peak months.
The consultancy defines a multi-millionaire as having a wealth of $10 million or more.
Notably, Dubai ranks higher than more established cities such as Miami, Paris, Zurich, Los Angeles, Rio and Sydney. Abu Dhabi is estimated to have over 500 second homes.
London tops the list with 19,500 multi-millionaires with second homes in the city (as of December 2016). Second on the list is New York with 18,400 multi-millionaires, followed by Hong Kong (15,000) and Singapore (11,700).
High net worth individuals mostly buy second homes in areas such as the Palm Jumeirah, Emirates Hills and Downtown Dubai. "Other new projects such as Jumeirah Hills and waterside villas on the Dubai Water Canal are also attracting attention along with one-of-a-kind apartments such as penthouses, etc," says Mario Volpi, chief sales officer, Kensington Exclusive Properties.
Second homes bought by the uber wealthy are usually held for when the family needs it and are rarely let out.
"The majority of such buyers keep their property for themselves, their family members and friends to stay in as a holiday home. Tenanted properties often require a lot of upkeep, which is why the owners opt to leave them vacant. Besides this, the investment returns on luxury homes aren't attractive enough. In most cases, these buyers have a maid who takes care of the property while the owners are away and opens the door to family members and friends who are in town. We very rarely see such properties rented out by a foreign end-user," observes Daniel Garofoli, luxury sales specialist at Luxhabitat.
Although buyers of all nationalities purchase second homes in Dubai, agents cite Saudi nationals in particular as well as individuals from the wider GCC.
"The majority of HNW clients are from within the GCC, India, Pakistan, the UK and European wealth centres. However, there are many more nationalities at that level securing second homes in Dubai," explains Maria Morris, partner - Knight Frank Middle East.
Many Russian/former Soviet Union nationals and those coming from Western Europe such as the UK, Italy, Monaco and France also go for second homes in Dubai, adds Volpi.
The price range for a second home purchased by UHNWIs is usually in the range of Dh10 million to Dh15 million. They opt for beach homes as well as pied-à-terres, depending on their existing property portfolio.
"If they own a beach home in south of France, they might want to enjoy the city life in Downtown Dubai or Dubai Marina. If they have their apartment in the middle of Moscow, they might go for a villa on the Palm or an apartment/penthouse with private beach," says Luxhabitat's Garofoli.
Meanwhile, Knight Frank's Morris says the agency is seeing a shift in demand from very large villas to well-designed, high specification apartments for second home purchases.
Multi-millionaires demand privacy, high security amenities, quality and easy access to the city from their second homes.
"Upgraded apartments and villas are achieving a higher price than original shell and core products from developers. If a property has a state-of-the-art kitchen, upgraded bathrooms and come fully furnished with branded high quality furniture, that's the most sought-after property for such a high net worth buyer. They prefer to move in to the property with just their luggage," says Garofoli.
"Other than financial objectives such as long-term capital appreciation, the HNWI tends to look for high-quality offerings that align with their global portfolios in other key international cities such as London, New York, Hong Kong, etc," adds Morris.
Multi millionaires also typically go for properties which are out of reach to others either by the uniqueness of the property itself or the price tag.
"They are attracted to developments where there are limited units or one-off properties within an apartment block such as exclusive penthouses," says Volpi.
Brokerages see an increase in enquiries and viewings from HNW clients from September to March. "We mostly get enquiries way ahead of the arrival of the purchaser, often from their assistant or family members," concludes Garofoli.
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