Dubai's premium real estate prices surge due to a decline in availability and strong demand from abroad
Published Date: 14 Jun, 2024
Dubai's premium real estate prices surge due to a decline in availability and strong demand from abroad
According to a survey released on Tuesday by property consultancy Knight Frank, prices in Dubai's premium residential market—which includes Jumeirah Bay Island, The Palm Jumeirah, and Emirates Hills—grew by more than 26% in the previous year.
The number of properties sold for more than $10 million in the first 3 months of this year was 105, which represents a 19% increase over the same period the previous year. Within the quarter, slightly more than one-third of all transactions took place at Palm Jumeirah.
"Dubai's prime housing market has grown by 26.3% over the last calendar year, easily making it one of, perhaps not the fastest, developing prime housing market globally, after growing by 16.3% in 2023, following a remarkable 44.4 percent boost during 2022," said Faisal Durrani, collaborator and director of Middle East investigation at Knight Frank.
With $1.73 billion in the overall worth of luxury villas for sale in Dubai in the first quarter of 2023, Dubai is now the world's largest market for the sale of these properties, up 6% over the same time in 2023.
According to a January analysis by Knight Frank, sales of properties priced at $10 million or more in Dubai hit all-time highs in 2023, almost doubling to $7.6 billion, surpassing that of London and New York.
Dubai's real estate market has been able to retain the interest of wealthy foreign purchasers thanks to its global connectedness, favorable borrowing rates, and laws that promote long-term residency.
Future Expansion
Although the market as a whole is anticipated to grow by 3.5% this year, Knight Frank projects a more moderate 5% gain in Dubai's premier market.
Mr. Durrani stated, "Our projections are not without risk."
"A slowdown in the world economy and its potential effects on the regional economy, along with the possibility of a rise in tensions within the region, are moderate to significant risks. The latter could also serve as a major catalyst for an increase in oil prices."
This might then lead to increased interest rates and worldwide inflation, "which could drive up the cost of borrowing further and ultimately dampen demand," he warned.
According to Mr. Durrani, there is less risk to market participants if there is a possible housing glut.
"We believe that the city is still undersupplied, especially considering the anticipated population growth and the scarcity of newly constructed homes in desirable neighborhoods and higher price ranges."
Dubai Hills Estate is one of the key places in the UAE that is expanding the fastest for domestic purchasers, according to Knight Frank.
Rise in Cost
"The number of residences that are up for sale has dropped by 75% to just more than one thousand units this past March, as prices have predictably increased in response to the increasing desire to live here, rising by nearly 11% over the last 12 months."
Sales of off-plan residences accounted for a significant portion of the growth in the first quarter of 2023, according to John Lyons, general director of Espace Properties, which handled 20% of the villa sales in Palm Jumeirah-Dubai.
According to him, there have been 18 transactions over the $10 million markup in the aftermarket for completed residences, down from 21 in Q1 2023.
Date: 14 Jun, 2024
