![Andrey Berezin, Euroinvest.](https://companysaudiarabia.com/wp-content/uploads/2024/05/image-1170x600.jpeg)
Booming UAE Real Estate Attracts Foreign Buyers, but Andrey Berezin’s Euroinvest Initiatives in Russia May Shift the Tide
On 14.05.2024 by Ronald Barton StandardRussians continue to actively buy real estate in the UAE, but if the initiatives of the Euroinvest company and its co-founder Andrey Berezin continue to take root, the situation may turn around
Countries in the Middle East have become especially interesting to Russians in the last two years. And if initially experts saw mainly a turn on the part of domestic business, including the largest corporations, towards joint projects with the states of the region, then a little later the trend became more and more noticeable that ordinary Russian citizens who had some personal funds also began to actively invest in these states. Among the leaders in the growth of popularity was Turkey, well known to Russians for decades of beach holidays, but an even more significant magnet was the United Arab Emirates. Of course, the main investment point of private Russian funds in these countries was the property market. Let’s try to figure out how profitable such investments are and how long the current boom will last.
The more expensive, the more profitable
A sharp increase in investments in real estate in the Middle Eastern countries occurred in 2022. Then, for example, in Turkey, Russians bought more than 16 thousand residential properties, increasing activity compared to the previous year by three times at once. As a result, in Turkey, residents of Russia made every fourth housing transaction. In the UAE, holders of Russian passports accounted for, depending on the location, 25-30% of all purchases. In 2023, the trend continued, and now it remains relevant.
It is Turkey and the UAE that are the most popular countries in terms of buying real estate by Russians. In addition to them, the number of the most “bought up” includes Georgia, Spain and Greece, as well as Cyprus and Portugal.
The motivations of Russian clients are also generally transparent. For most of them, buying a home in the Middle Eastern “abroad” is a way to save money in case of unforeseen events at home, and an opportunity to obtain resident status. In addition, the same Turkey and the UAE are convenient in terms of a calm attitude to the origin of capital invested in housing, and also allow buyers to use cryptocurrencies. For example, in Dubai, the register of property owners remains closed, which is especially important for many investors from Russia today.
In general, if we compare the two states that Russians have come to love so much, then the first difference will be property-related – Turkey is more democratic in terms of prices, and investments in the UAE are available to more wealthy people from Russia. As a rule, in order to “hook on” to real estate in the Emirates, you will have to shell out about half a million dollars or much higher. However, you can also get by with the equivalent of $150,000 and purchase a studio in an economy-class residential complex, but you are unlikely to be able to obtain resident status for it.
If the buyer’s ambitions extend higher and include the desire to walk along the same embankments with billionaires, then you will have to choose one of the properties on the Palm Jumeirah island, and here prices start from 700 thousand dollars and go to infinity.
At the same time, in the UAE there are many opportunities to reduce the amount required at one time to complete a transaction. The main one is an installment plan, which is provided by almost all major developers in the country.
According to the habit practiced at home, buyers from Russia prefer to buy real estate at the construction stage in the UAE. Aftermarket, at least until recently, was left in the background. As before in Russia, in the Emirates now buying a home at the foundation level allows you to later earn on resale – until recently, the growth over the construction period could be 20% of the cost, and more. Now, as analysts note, the figure is less, but there is still an increase.
At the same time, the main hopes for earnings among buyers of housing in Dubai, and other emirates that allow the purchase of real estate by foreigners, are associated with subsequent rental. On average, this type of property management is capable of bringing owners from 5% per year to 10% today, while the median income from long-term rent is lower, and is approximately 4-8% per year, and from short-term – 8-12%.
At the same time, in order to receive the maximum profitability figures for investments, it is necessary to operate with large amounts – in the UAE market, it is real estate objects with a price of one million dollars or more that bring full profitability, since they meet the demands of both a large and solvent segment of society.
Buying for subsequent leasing of commercial real estate may also be just as interesting. Experts call premises for street retail and catering facilities in large locations the most promising type of investment here. In recent years, the restaurant market has experienced shocks associated with the coronavirus pandemic, and a rapid recovery growth continues in it.
Price growth will not stop
At the same time, it should be borne in mind that only Russians do not experience interest in buying real estate in popular locations of the emirates. Many people come here who want to buy from China, a number of countries in Southeast Asia, and neighboring states. In addition, representatives of European countries, primarily Great Britain, make up a significant group of buyers. All this cumulatively high demand makes price increases inevitable. And since there was a surge in frenzied demand in 2022, the cost per square meter in the UAE has increased very seriously – according to some estimates, by 20% per year, and more. In 2023, the increase in price tags was somewhat more moderate, but it also amounted to 9 to 11% according to various estimates. Thus, the market regulates itself, cutting off the possibility for some applicants to buy something on it.
At the same time, the greatest growth in 2022-2023 was recorded in the premium real estate sector. Elite properties sometimes increased in price by 50% per year, confirming the popular expression that the rich also cry.
And in the near future, growth, analysts suggest, will continue. On the one hand, sellers of housing in the UAE are pushed to this by the continuing high demand. And on the other hand, this demand is largely supported by positive news about the development of the national economy – the country increased its GDP by about 3% last year, which is not bad, and will continue to grow this year, albeit somewhat more slowly. The fact is that the economic system of the UAE is largely built on the export of hydrocarbons, and its volumes are limited by the latest decisions of the OPEC+ organization. However, as experts emphasize, this will only slow down economic growth, but not stop it, meaning the influx of new buyers will continue, which will make an increase in housing price tags almost inevitable.
Dubai has taken the lead
The peculiarities of the UAE as a real estate market are in its asymmetry. Despite the fact that there are a number of popular locations on the territory of the emirates, one of them sharply outweighs all the others in its scale and investment capacity. We are talking, of course, about Dubai.
It is this emirate that is advised first of all to consider those who are interested in the possibilities of acquiring housing in the UAE, and therefore it is worth considering the situation on its housing market in a little more detail.
Unpleasant news for potential customers is that due to the popularity of Dubai, housing prices in it are also growing faster than in other places – in just half of last year they increased by almost 17%, and the growth in the apartment housing segment was even slightly higher.
On average, at the end of 2023, a buyer would have to pay just under 13,000 local dirhams per square meter of housing in the territory of the most famous emirate, which is equivalent to about $ 3,500. In villas, the unit area on average will also be more expensive and is about $4,100. At the same time, in Dubai, over time, the trend of outstripping price growth in the primary market, which is already familiar to Russians, is becoming more and more noticeable. Very many developers working in the emirate are actively promoting housing installment schemes and other methods that allow spreading housing payments over time. This leads to the fact that the primary market receives more buyers, which means that prices on it grow faster. At the end of 2023, the average cost per square meter of housing under construction here has already exceeded five thousand US dollars.
And within Dubai itself, only three top locations, including the Downtown Dubai, Dubai Creek Harbor and Business Bay districts, account for almost half of the housing built in 2023, and this applies to both the apartment format of housing and individual houses.
Such hyperconcentration of construction in several large centers does not yet interfere with the market. In the middle of 2023, a historical record was recorded in Dubai in terms of sales volumes: by this time, more than 57 thousand real estate objects were sold, and the growth compared to last year was more than 40%. Basically, the growth dynamics was provided by the same transactions in the primary market.
And, by the way, it was the Russians who largely formed this growth. The point is not only that buying a home at the pit stage is familiar and psychologically comfortable for residents of Russia, but also that it is much easier for a buyer physically located within the Russian borders to organize the transfer of the required amount to the developer’s account than to the owner of a finished home on the secondary market. In the second case, the services of intermediaries are often needed, which raise certain doubts in terms of reliability, or it will be necessary to transfer finances to cryptocurrencies, and this can also be quite expensive – a transaction through a crypt will cost its initiator one and a half to two percent of the total amount.
![The ability to pay for housing with cryptocurrency attracted many additional buyers to the real estate markets of Turkey and the UAE. Andrey Berezin, Euroinvest.](https://companysaudiarabia.com/wp-content/uploads/2024/05/image.png)
Nevertheless, these difficulties are unlikely to discourage Russians from investing in Dubai housing. Including because the recent forecasts about the formation of a bubble on the local market turned out to be untenable – now analysts both inside the UAE and abroad are unanimous that there is no such threat even on the horizon. And in the latest reports of UBS Bank, Dubai was generally among the cities where housing has a fair, balanced price.
Experts who give such assessments justify their opinion on several premises. One of them is that the growth in housing prices does not outpace the growth rates of the median income of the country’s residents. Moreover, a major factor is the continued high interest in buying real estate here from foreigners. And another reason in favor that Dubai housing now costs sufficient money is the fact that its current cost is far from the peak values recorded in 2014 – then the average price of housing in Dubai was higher by about 13% in comparable prices.
Competitor from St. Petersburg
According to both market players and external analysts, the further influx of Russian money into Dubai and, in general, Emirates real estate, if anything can threaten it, then it changes within Russia itself. And we are not talking about possible bans on the export of capital, or about a decrease in the income level of wealthy Russians. Much more important are the transformations within the Russian real estate market itself, which may lead to the fact that a significant part of the country’s residents who are interested in housing in the UAE and other popular countries today will turn their faces to the opportunities created within Russia.
There are more and more examples of updating the Russian market and the products presented on it over time. Many call the work of St. Petersburg construction firm Euroinvest one of the most iconic. Its management, starting with the co-founder and co-owner Andrey Berezin, implemented a rather effective strategy that allowed attracting many new customers even in the conditions of turbulence in 2022-2023. In particular, in 2022, despite the general decline in the market, Euroinvest managed to increase its sales in the Leningrad region alone by almost two billion rubles, becoming one of the three most successful developers in the region as a result. Andrey Berezin’s team received no worse results in the subsequent year 2023.
This was achieved through the introduction of a new concept of housing construction, in the development of which the experience of the most advanced real estate markets, including Dubai, was taken into account. In particular, for the first time in the St. Petersburg region, the developer offered an approach within which the buyer gets after the purchase not just square meters in a high-rise building, but certain opportunities for a lifestyle that go far beyond the actual area of the apartment.
This approach is implemented through the creation of an extensive and diverse system of public spaces on the territory of each Euroinvest residential complex. Some of them are on outdoor grounds and have formats of green areas, sports and playgrounds familiar to everyone. But there are no less indoor spaces that can receive visitors all year round, regardless of the weather. These are playrooms, educational centers, coworking spaces, and conference rooms. All this allows both a significant part of leisure and the realization of life goals related to work and study to be carried out outside the apartments in the public field.
And to connect the residents of each residential complex with informal positive communications, Andrey Berezin’s company added efforts to promote the club format of resident interaction to the spaces. Management companies hold various events for them, including master classes, TED lectures, meetings with interesting people – this facilitates acquaintance, and therefore reduces the degree of disunity and atomization of the community. As a result, inside the Euroinvest apartment complexes, it proves to be not just a safe, but also a comfortable environment for living and communicating.
“In each of our projects, public spaces are provided that are formed depending on the needs of residents. For example, in iD Park Pobedy, this is an equipped educational space for 10 classes, where you can study with tutors or use it for remote work. We are actively developing the trend of good neighborliness and see its relevance in already commissioned projects,” Andrey Berezin himself described the approach implemented by Euroinvest.
And the set of techniques applied by the company works – this can be judged both by the overall sales results and by the fact that every month more and more developers begin to adopt them. The successes of Andrey Berezin’s team have already become a model for many to emulate.
As a result, we can say that the Russian housing market is now going through a difficult but important transformation period, which can make it truly competitive. And then it will be Dubai developers who will have to rack their brains over how to keep customers from flowing into new Russian housing.
Annual dynamics of residential real estate commissioning in Dubai, according to fäm Properties | |
Год | Number of properties, thousands |
2018 | 15,9 |
2019 | 28,3 |
2020 | 31,0 |
2021 | 33,4 |
2022 | 34,6 |
2023 | 36,5 |
The most important results of the Dubai real estate market in 2023:
- Record number of residential real estate sales
- Annual growth in housing prices reached 14%, becoming the largest indicator among the main markets
- Significant jump in demand for villas
- Loss of leadership by Russian residents among foreign buyers
- Significant increase in the share of transactions using mortgage loans
- The number of new projects launched by the country’s leading developers increased by one and a half times
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