the Burj Khalifa, using cash in many cases as Western sanctions crimp their access to banks.
Iranians were the second-largest buyers of luxury apartments and commercial space in the Burj Khalifa, after Indian citizens, in the first half of the year, Dubai’s land department reported last week.
In both cases, troubled economies back home are driving Indians and Iranians to send their money to Dubai, doing wonders to help the economy of the emirate recover from its bad days, although doing nothing for Iran or India.
Apartments in the 828-meter building range from 2,600 UAE dirhams ($710) to 3,800 dirhams ($1,038) per square foot, according to real estate brokers.
The land department said 358 Iranians had purchased apartments in the first half of 2012 as Dubai’s property market shows signs of slowly stabilizing after home prices slumped by more than 60 percent from their peak in 2008.
“Iranians have problems getting finance, which is why they are mostly involved in cash buys,” said a Dubai-based real estate broker who declined to be identified. “We have sold three floors on the Burj and this involved Iranian buyers.”
“Iranian investors have been in Dubai for a long time and have money here which can be easily invested,” said Oliver Essex, a consultant with Powerhouse Properties, which specializes in Burj Khalifa property.
For the Indian buyers, Dubai property is a refuge from currency depreciation that has taken the Indian rupee down about 20 percent against the US dollar since the third quarter of 2011.
For the Iranians, Dubai provides a safe place to park money as international sanctions, imposed over Tehran’s disputed nuclear program, ravage the Iranian economy and drive the rial downward.
For Dubai residents, the Iranians and Indians are like an economic rescue team. Four years after a property bubble burst in Dubai, triggering a slide that cut home prices more than 60 percent from their peak, the market finally appears to have stabilized and is recovering in some areas. A major reason is that influx of foreign money using the emirate as a safe haven.
“A lot of people in the Middle East and Russia, Pakistan, the Asian sub-continent are looking for a safe haven,” said Farouk Soussa, Middle East economist at Citigroup in Dubai. “Perceptions are that the real estate market has bottomed out. If you are looking for more long-term investment, the market in Dubai seems reasonable.”
The recovery is not being felt throughout the market; in less popular areas, especially less affluent districts in northern Dubai, prices have stayed weak, analysts say.
“We see Dubai real estate performing well over the medium term,” said Graham Stock, strategist at frontier fund manager Insparo in London, adding that Dubai to some extent resembled London in the way that safe-haven buying by foreign investors was aiding property prices.
In London, prices have been boosted by investors from countries such as Russia and China because of Britain’s political stability and strong legal system, while the sector has also attracted buyers from crisis-hit Greece.
Dubai lures buyers from the Indian subcontinent and Iran because of geographical proximity, easy access through its well-developed web of international links, and large Indian, Pakistani and Iranian communities.
Meanwhile, political stability in the UAE during violent uprisings around the Middle East has also attracted Arab money to Dubai.
Money from Afghanistan, created by international aid there, is believed to be flowing into Dubai as nervous businessmen prepare for the withdrawal of most foreign troops from that country by the end of 2014.
Foreign investors bought real estate assets in Dubai worth 28.3 billion dirhams ($7.7 billion) in the first half of 2012, up 36 percent over last year, Dubai government figures show.
Nobody is expecting the market to come close to resuming the wild boom seen before 2008; prices will take many years, perhaps decades to regain their peak levels.
The UAE dirham’s peg to the US dollar will help to make Dubai still more attractive if, for example, a partial collapse of the euro zone sends funds fleeing.