Kazakh сonstruction tycoon Rakhimbayev’s next big project: Dubai apartments

BI Group is set to announce the launch of sales for its latest overseas project: apartments on Dubai Islands, an artificial archipelago in the UAE. A month and a half ago, the Kazakhstani developer began offering projects in the U.S.

«BI Group’s growth strategy spans 10 countries over 10 years,» Aidyn Rakhimbayev, founder and chairman of BI Group, shared his plans on Instagram.

By 2024, the company has implemented projects in Uzbekistan, Azerbaijan, Georgia, Kyrgyzstan and Ukraine. In early October, the developer announced several projects in the U.S. The UAE will be the seventh country where BI Group intends to engage in construction activities. The company’s development department has not yet decided on the other three locations.

BI Group’s Dubai venture

BI Group is set to unveil its Dubai project in early December. However, Kursiv.media obtained some details ahead of the official sales launch.

The developer is digging foundations for future high-rise buildings on Central Island, the largest of the Dubai Islands (formerly known as Deira Islands and Palm Deira).

The first line of Central Island’s northern coast will feature three eight-story Flora towers offering panoramic sea views, including from the «landscape pool» (as described in BI Group brochures). Two 14-story towers, Canal One and Harbour, will be built in a «refined minimalism» style on the island’s southeastern side. The upper floors of these towers will likely offer views of the canal between the island and the mainland, as well as the surrounding landscape. The entry-level investment for BI Group’s Dubai project is approximately $65,000. This is a down payment for a one-bedroom apartment, starting at 62 square meters (sq. m.), in one of the more affordable projects: Canal One or Harbour. Investors will need to pay an additional $260,000 over the next two to three years during construction. The Flora project offers larger apartments starting at 77 sq. m. and higher prices, with a minimum of $7,300 per sq. m.

«Initially, a 20% down payment plus a 4% land tax is required. During construction, an additional 30% is paid in installments. The remaining 50% is due upon key handover,» explained the BI Group sales department.

BI Group’s partner in Dubai

BI Group will partner with local developer Prestige One to build and sell its Dubai projects. The local company purchased the land for the project from the state developer Nakheel and will handle the bulk of apartment sales. For example, at the start of sales in the Flora project, BI Group plans to sell only every seventh lot, 34 to 36 out of 252 apartments. These lots will be located on the seventh floors of the outer towers and on the fifth floor of the central building.

State-owned Nakheel has been developing the man-made archipelago since 2004. Originally, this group of islands was intended to complement Palm Jumeirah, but the 2007-2008 financial crisis halted the project. Now, construction has resumed in the area, with developers building both high-rise buildings and villas with townhouses.

The project envisions five islands — Central Island, Marina Island, Shore Island, Golf Island and Elite Island — featuring hotels, shopping centers, entertainment facilities, a golf club and residential buildings, including villas and apartment complexes with resort-style services and premium infrastructure.

The islands are connected to the mainland by the Infinity Bridge, which features an arch shaped like the infinity symbol (completed in 2016). Dubai Islands are a 30-minute drive from Dubai Airport and 40 to 45 minutes from Dubai Mall.

Dubai market participants view Nakheel projects favorably.

«Nakheel is known for its iconic projects and decent quality compared to Damac (another large construction holding in the UAE),» said a market participant. «Given the sea views and Nakheel’s expertise in infrastructure, the project is promising. However, one potential drawback is the relatively small plot sizes.»

BI Group’s announced prices of $5,300 to $5,500 per sq. m. seem reasonable compared to other projects on the Dubai Islands. For example, the Treppan Living residential project (developer: Fakhruddin Properties, delivery date: 2026) initially started at $6,800 and has since increased to a minimum of $8,900 per sq. m.

What real estate Kazakhstanis want to buy overseas

Announcements of overseas projects by Kazakhstan’s largest developer have coincided with record-breaking activity among Kazakhstanis in foreign real estate markets, as brokers have observed this year.

According to Tranio, an international real estate agency, in the first 10 months of 2024, the number of applications from investors in Kazakhstan was 17.8% higher year-on-year (YoY). Interest in foreign real estate from Kazakhstan has surpassed even the peak levels of 2021, reaching a six-year high.

However, trends vary by country. For example, both demand and the average transaction value for real estate purchases in the U.S. by Kazakhstani investors have grown (+13.2% in applications and +15% in the average transaction value YoY). Now, according to Tranio, the country ranks fifth in popularity among Kazakhstani buyers of foreign real estate.

Interest in UAE real estate among buyers from Kazakhstan has been growing steadily since 2021, peaking last year. However, 2024 has shown a decline in the number of requests (-21.2% YoY) and the median budget (-13% compared to 2023 and -49% compared to 2022).

Still, the UAE remains one of the top three destinations. With a 12.3% share of the total applications, the country ranks second in popularity among Kazakhstanis (Thailand is first and Turkey is third). Experts predict that the UAE, particularly Dubai, will remain a top destination for real estate investment, enabling developers from Kazakhstan to execute their projects successfully.

«The Dubai market might be overbought, but it could remain that way for a significant period,» said Evgeniy Dolbilin, partner at Scott Holland / CBRE in Central Asia and Kazakhstan. «Dubai has benefited from an influx of relocated individuals from Russia and Ukraine, as well as wealthy migrants from England, the EU and Africa. The ease of obtaining residency, high security, minimal taxation and lenient banking regulations contribute to Dubai’s success. I believe BI Group can succeed in this market. Demand remains strong and is unlikely to weaken significantly in the short term. Only a global recession could change the situation. Any other geopolitical events or global upheavals would likely increase interest in Dubai. The UAE is seen as a safe haven, and clients are willing to pay a premium for the privilege of living there, i.e. for real estate.»

Other popular destinations among Arab countries

Tranio attributes the cooling of the Dubai market partly to its cyclical nature and partly to a shift in investor interest toward new markets in the region, specifically the other emirates of the UAE, Oman, Qatar and Saudi Arabia.

«Investors who purchased Dubai real estate two years ago are nearing project completion and starting to see returns on their investments. Some are now looking for new speculative opportunities, often in more affordable segments like package deals. Others are diversifying their portfolios with alternative products in emerging markets like Ras Al Khaimah and Oman, where entry costs are lower than in Dubai’s more established market,» said Mikhail Bulanov, co-founder and CEO of Tranio.

Analysts believe that emerging real estate markets offer opportunities similar to those in Dubai a few years ago. These markets often have less competition, supply shortages and lower entry costs, allowing for potentially higher returns. For example, some new developments in these markets might be comparable to Palm Jumeirah in terms of scale and ambition, but at a fraction of the cost (up to $300,000). Meanwhile, the most affordable off-plan apartment deal in Palm Jumeirah in the past six months was $1.1 million for a one-bedroom unit (116.96 sq. m.) in the Ellington Beach House project. Recent data shows a median budget of $2.65 million (average $4.5 million) for property purchases between October and November 2023 (21 deals). The average price per square meter was $13,750.

Kazakh investors are also turning to Saudi Arabia, particularly Riyadh and Jeddah. These cities experienced significant growth in the second quarter of 2024, with increases of 51% and 43% YoY, respectively. Since 2020, villa values in Riyadh have increased by an average of 12.2% annually, while apartments have increased by 11.7%. One of the main attractions for Kazakh investors in Saudi Arabia is the opportunity to obtain a «golden visa» through investments of at least $1.07 million.

Given this investment threshold, the median budget for buyers in Saudi Arabia, according to Tranio, is slightly below $1 million, at around $942,000.