Damac CEO Expresses Concerns Over Expensive Cost of Living in Dubai

Dubai’s property market continues to surge, with 2024 on track to set new records for both sales figures and property values, local real estate firms report. The city’s escalating demand, particularly in the luxury sector, is driving up prices across the board. This trend comes as the United Arab Emirates is set to be the world’s leading wealth magnet for the third consecutive year.

Hussain Sajwani, chairman of Damac Properties, has expressed mixed feelings about the market's current trajectory. In an interview with Dan Murphy from Riyadh, Sajwani highlighted concerns about Dubai’s increasing cost of living. “What concerns me a little bit in Dubai is that it’s becoming an expensive city. I’ve mentioned before that Dubai was going to become expensive,” Sajwani said. He attributed this to high demand from both talented professionals and average residents, which has led to rising costs in various sectors.

Sajwani pointed out specific challenges such as the difficulty in securing school placements and the inevitable price hikes driven by high demand and inflation. “Today, getting a seat in a school is challenging, and naturally, businesses will raise prices, leading to higher inflation,” Sajwani noted. He expressed hope that the government would find solutions to manage these rising costs, though he acknowledged the difficulty in doing so amidst a continuous influx of people.

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Recent figures underscore the booming property market. In July 2024, property sales in Dubai reached 49.6 billion dirhams ($13.5 billion), marking a 31.63% increase from the same period in 2023. This growth reflects a broader trend, with the first half of 2024 alone witnessing over 43,000 property transactions valued at approximately AED122.9 billion, a 30% increase from the previous year. Elite Merit Real Estate attributes this growth to the rapid absorption of new inventory, noting that around 80% of units launched since 2022 have already been sold.

Sajwani acknowledged the market’s exceptional performance, attributing it to Dubai's growing appeal. “The Dubai property market is doing extremely well, and I believe it will continue to prosper,” he said. He observed a strong interest in Dubai from diverse demographics, including taxi drivers, waiters, and businessmen. “Dubai is now attracting a wide range of talented individuals and is growing beyond pre-Covid levels,” Sajwani added.

The Covid-19 pandemic notably accelerated Dubai’s attractiveness as a residence and business hub. During global lockdowns, the emirate’s proactive stance on tourism and new visa programs for remote workers and entrepreneurs bolstered its appeal. Sajwani highlighted how these measures have transformed Dubai into a global city, drawing substantial talent and investment.

Reflecting on past market volatility, Sajwani expressed confidence in the current stability of Dubai’s property sector. He drew comparisons with the 2008-2009 crisis, noting that recent regulatory changes have fortified the market. “One hundred percent, Dubai is more stable now,” Sajwani affirmed. He credited stringent regulations introduced after the previous crisis for enhancing market efficiency. “The new regulations, which are very strict on developers, customers, and zoning, have been highly effective. They ensure that customer funds are well-protected and contribute to a more robust market.”

Overall, despite rising costs and growing concerns, Dubai’s property market remains vibrant and resilient, with robust regulations supporting its continued growth and stability.