The seller made a 242% profit in two years by just sitting on the property.
(Bloomberg) — This isn’t a spectacular mansion. It’s not a luxury penthouse or a designer apartment.
It’s a bunch of sand on a human-made island in Dubai, and it just sold on April 19 for 125 million dirhams ($34 million), setting a record in a market that continues to benefit from an influx of foreign wealth.
The 24,500-square-foot empty parcel is on the sought-after Jumeirah Bay Island, a seahorse-shaped piece of land accessible by bridge from the Dubai mainland. That works out to more than 5,000 dirhams per square foot, which the brokerage on the deal, Knight Frank, identified as a new high. The buyer, who doesn’t live in the United Arab Emirates, is planning to build a family vacation home on the property. His identity wasn’t disclosed.
“It’s 125 million for sand,” says Andrew Cummings, head of prime residential at Knight Frank in Dubai. “Everything that’s been making the press has predominantly been spectacular villas, it’s been incredible penthouses and all this stuff. But this is just a massive record breaker for a land plot.”
The property was purchased two years ago for 36.5 million dirhams, according to the Dubai Land Department, netting the seller a tidy 88.5 million-dirham profit.
The runup to the city becoming such a heady real estate market has been fueled by high oil prices, a desire by the world’s rich to park wealth in property and a sense that low-tax, low-crime Dubai is a haven in times of pandemic and war.
Russian citizens have been snapping up properties in a city that’s still welcoming them with open arms, while new, long-term resident “golden” visas are attracting others with wealth to invest in Dubai real estate as well. Once hampered by overbuilding, the city now has what some brokers say is an undersupply of properties—especially on the high end.
“Sellers are in quite a strong position at the moment to dictate where the prices are, because there are such limited options available for people to choose from, especially beachfront,” says Knight Frank’s Lyndsey Redstone, one of the brokers on the deal.
The parcel that sold last week is one of only 128 originally offered on Jumeirah Bay Island by government-backed developer Meraas Holding, making it quite exclusive compared with, for example, the thousands of homes on the iconic Palm Jumeirah development. All of the parcels were initially sold off years ago, and some have since been flipped at a handsome profit. The master development rules prevent the land from being subdivided, but some buyers have combined plots to create space for megamansions, Cummings says.
Only a handful of homes on the island have been completed. Some are under construction, and ground has yet to be broken on many others.
The island is also home to the Bulgari Resort, one of the most expensive hotels in the city, as well as the future Bulgari Lighthouse tower, where apartment sale prices have been reaching highs before it’s even built. The top penthouse—a nine-bedroom apartment with five parking spaces—sold for 410 million dirhams in February.
Real estate brokers predict records will continue to be broken. The seller in the Jumeirah Bay Island transaction, for example, also owns an identical plot next to the first. He plans to offer it for 135 million dirhams.
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