Dubai Has Too Many Millionaires – Says Dubai Billionaire

26.10.2023 - 16:09 / skift.com / Jean-Jacques Morin / Josh Corder

Real estate magnate Mohamed Alabbar said Wednesday he is “scared” about Dubai’s snowballing luxury market because there aren’t enough resources to cater to demand.

Alabbar was asked about Dubai’s luxury market at the Future Investment Initiative in Riyadh this week. “I’m scared, I’m scared. No, it’s not sustainable,” the Emirati billionaire said. “Dubai is a very small town. We had about 5,000 millionaires move in. Even if the market crashes and only 2,500 millionaires move in this year, we don’t have enough space [or] enough homes for these people.”

Alabbar is one of the wealthiest men in the city. As founder of Emaar Properties, he has racked up a net worth in the ballpark of $5 billion. And he is responsible for mega-projects, such as the 826-meter-tall Burj Khalifa, the world’s biggest mall, and a hotel portfolio that includes the Armani Dubai.

But even he is fearful of the image Dubai has created for itself: A tax-free haven for the rich, full of luxury apartments and jaw-dropping hotels.

The emirate’s population is expected to grow from the current 3.5 million to 5.5 million by 2030.

According to the latest report by Henley & Partners, the majority of millionaires and high-net-worth individuals are expected to primarily move to the UAE from India. That is followed by substantial numbers from the UK and Russia.

The Henley Private Wealth Migration Report for 2023 anticipates that 4,500 millionaires will choose to relocate to the UAE during this year. In 2022, the UAE outperformed global expectations by attracting 5,200 high-net-worth individuals.

It is estimated Dubai already has approximately 67,000 millionaires.

Alabbar added that Dubai currently has a problem in the construction field because it is trying to build too much, too quickly.

“We have problems in Dubai now with execution just because the market is going 30% up each year in volume,” he said.

This frenzy extends to hotel development. By the end of this year, the city will have more than 154,000 keys on offer to travelers, according to data from Knight Frank. It is dominated by luxury: Looking at the pipeline over the next seven years, 46% of the planned 24,500 keys are within luxury properties. Another 25% is for upscale, and just 4% is for 3-star hotel rooms.

The official Dubai tourism authority has said it is trying to push for greater product diversity and affordability in the city. But developers and operators continue to push for trophy assets, which leads to rising rates.

Case in point, last year, in a third-quarter 2022 earnings call, Accor CFO Jean-Jacques Morin said: “If I do all my openings in China, it is not going to do the same thing to my bottom line, than if I do all my openings in a nice SLS in Dubai. So I want