Will Dubai's Real Estate Boom Continue? [Kim Yongnam's Real Estate Asset Management]

As global economic uncertainty deepens, the cross-border movement of high-net-worth individuals is rapidly accelerating. This year alone, an estimated 142,000 millionaires are expected to relocate to new residences, a migration that is poised to be recorded as the largest asset reallocation in modern history.

Dubai, a destination still unfamiliar to many Korean investors, has garnered significant attention in recent years for its tax-free environment, residency programs, and potential for capital gains. In fact, Dubai is projected to attract approximately 9,800 high-net-worth individuals this year, marking its third consecutive year as the top destination for net inflows. The assets these individuals are moving are estimated to be worth around $63 billion (approximately 87.11 trillion won).

In contrast, about 2,400 high-net-worth individuals are expected to emigrate from South Korea in the same year, a figure more than double that of the previous year. In this context of accelerating global asset diversification, it is necessary to examine recent data to determine whether Dubai's real estate market can be a stable choice.

In the second quarter of this year, the total transaction value of luxury real estate in Dubai priced at $10 million (approximately 14 billion won) or more increased by 63% year-over-year to $2.6 billion (approximately 3.595 trillion won). However, the price increase has been somewhat limited compared to the growth in transaction volume. According to global real estate consulting firm Knight Frank, the average price per square meter in ten major communities was approximately 41,400 dirhams (about 15.4 million won), an 18% increase from the previous year but with almost no change on a quarterly basis. This can be interpreted as a gradual stabilization rather than short-term overheating.

A shift is also being detected in transaction types. The fact that 80% of the 28 transactions over $10 million in the Palm Jumeirah area were for apartments indicates that demand for high-end housing is shifting from a focus on villas to high-rise apartments.

A structural imbalance is also appearing on the supply side. In 2024, Dubai saw an influx of about 170,000 new residents, but the supply of new housing was only 30,000 units. In particular, the supply of properties priced at $10 million or more decreased by 39%, and those priced at $25 million (approximately 35 billion won) or more fell by 85%, leading to an extreme shortage in the ultra-luxury market.

The market is also observing a related phenomenon of the "accidental millionaire." While cases of properties purchased for under $1 million in the last three years now being valued at over $1 million have increased by about 80%, there is also an analysis that this is a temporary phenomenon created by a low base price and limited supply.

Dubai's investment conditions offer clear advantages in terms of taxation. The structure, which exempts personal income tax, capital gains tax, property tax, and inheritance tax, is inevitably attractive to investors. A real estate investment of 2 million dirhams (approximately 750 million won) or more can secure a 10-year long-term residency visa, the "Golden Visa," which can be applied to the entire family, covering purposes from actual residence to children's education.

However, it is necessary to make a relative comparison, as similar benefits are offered by other countries such as Portugal and Greece.

Separate from the optimism about the market, some institutions are warning of a short-term correction. Fitch, one of the three major global credit rating agencies, forecasts a temporary price adjustment from late 2025 to early 2026, and investors need to closely monitor the market trend after the recent surge.

However, the fact that the resale rate within 12 months is only 5% suggests that stable, long-term holding-oriented demand is being maintained rather than speculation.

While it is clear that Dubai real estate continues to attract the interest of the global wealthy, the judgment of whether the current market is at a peak or at the beginning of another upward phase must be made coolly based on market data. In particular, the interpretation can vary depending on whether the investor's purpose is residence, capital gains, or tax planning.

In an era of accelerating global asset movement, Dubai is one of the cities at its center. However, the important question is whether the current upward trend is based on a "sustainable structure" and whether it aligns with the individual investor's strategy. The future outcome of the choices made by 2,400 Korean high-net-worth individuals may depend on how objectively they view this market.

<Korea Economic The Moneyist> Kim Yongnam, CEO and President of GlobalPMC Co., Ltd.