The Gulf Zeal Estate. Dubai and Riyadh are riding red-hot property booms, at least for now.

It's a villa fit for a Bond villain. Sited in Emirates Hills, an opulent Dubai neighborhood popular with politicians and billionaires, the mansion's interior is lined with 700,000 sheets of gold Leaf.

It sports a 24-carat gold jacuzzi, a 16-car garage and a coral-reef aquarium in the dining room. The asking price, when it was listed in June, was 750 million dirhams [ $204 million ].

The mansion is one example of a redhot property market in Dubai, the commercial hub of the United Arab Emirates [UAE].

Prices are also soaring in Riyadh, the Saudi capital. Both logged double-digit price increases last year, when much of the rich world was in a housing slump. Developers are thrilled. But investors are wondering how long the boom can continue.

In Dubai, property investment accounts for around 8% of GDP. It recorded nearly 122,700 sales last year, a 45% increase from 2021. The value of those transactions rose by 78%, fueled in part by surging sales of luxury homes.

In 2022, 219 properties went for over $10 million. There were 176 such deals in the first half of 2023 alone.

The boom looks different in Riyadh, which has been a focus of Vision 2030, the kingdom's plan to diversify its economy away from oil. Saudi citizens are moving there to find jobs and multinational firms have been told to move their regional headquarters to Riyadh by the end of the year or lose out on government contracts.

Soaring demand means soaring prices. At the end of the first quarter prices in Riyadh, where state-run developers are adding thousands of new homes, were up by 12% year-on-year for villas and by 22% for apartments, estimates Knight Frank, an estate agent.

The comparable figures in Jeddah, the Kingdom's second city and commercial capital were 2% and 7%.

In 2017 less than half of the Saudis were homeowners. Young people lived with their parents; poorer families rented.

In recent years the government has lowered mortgage-deposit requirements and introduced various subsidies. The latest census, in 2022 found that 61% of Saudi families owned homes.

Unlike many other targets in Vision 2030, the kingdom seems on track to meet its goals of 70% ownership by the end of the decade.

The World Students Society thanks The Economist.


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