DUBAI’S luxury real estate market will continue its upward trend this year following a strong performance in first quarter as overseas demand for prime residences in the emirate continues unabated, experts say. Analysts, senior executives and leading industry players said investor confidence in the UAE in general and Dubai in particular, is on the rise and reflected in the latest data issued by Knight Frank. The leading property consultancy said prices of $10 million-plus homes in Dubai grew at one of the fastest rates globally during the first three months of 2024 as the emirate recorded 105 deals, reflecting a year-on-year growth of 19 per cent. The total value of luxury homes sold in Dubai during the January-March 2024 quarter rose six per cent to $1.73 billion, according to Knight Frank. In 2023, Dubai recorded 431 home sales above $10 million, nearly 80 per cent higher than London (240) and New York (211), making them the top three most active luxury home markets in the world. "The level of deal activity in Dubai continues to strengthen, particularly at the top end of the market, where the near constant stream of international High Net Worth Individuals (HNWIs) vying for the city's most expensive homes persists," said Faisal Durrani, Knight Frank's head of research for Middle East and Africa.
To meet the demand for luxury properties, developers are increasing their offerings of off-plan stock. This strategy entices more buyers who are attracted by the potential for future gains, especially amidst the ongoing three-year rally in the real estate market." Haider Tuaima, Director and Head of Real Estate Research at ValuStrat.
INVESTOR CONFIDENCE
Petri Mannila, Head of Luxury, Penthouse.ae, said investor confidence in the UAE, particularly Dubai’s luxury market, is soaring. “In 2020, luxury property transactions in Dubai exceeding $10 million were only a handful. Last year, that number skyrocketed to 419, showcasing a growing appetite for high-end properties. The robust growth in Dubai’s luxury property segment is fuelled by a variety of factors including a limited supply of readily available units, particularly completed properties. This shortage of available units is pushing up demand and prices, especially in the secondary luxury market,” Mannila told BTR. He said investors are also attracted by the city’s unparalleled lifestyle, safety and security, investor-friendly government policies and a secure investment environment. “Dubai boasts some of the world’s best real estate returns, exceeding those of major cities like London and New York with property prices remaining comparatively lower. Attractive tax incentives further enhance the appeal for investors,” he said.
Haider Tuaima, Director and Head of Real Estate Research at ValuStrat, said the luxury property market in the UAE is fuelled by several key factors. These include a thriving economy, attributed to prudent governance, and the UAE's coveted tax-free safe-haven status. “The UAE's strategic location allows it to be easily accessible, with only a few hours' flight time from the majority of the world's population. To meet the demand for luxury properties, developers are increasing their offerings of off-plan stock. This strategy entices more buyers who are attracted by the potential for future gains, especially amidst the ongoing three-year rally in the real estate market,” Tuaima told BTR.
OVERSEAS BUYERS
Premium real estate in Dubai has been a highly desirable asset among international buyers and investors for many years now. Alongside the high quality of life and security on offer, the government has created additional incentives for real estate investments, with new requirements in place for acquiring the Golden Visa in the Emirate. “The Dubai property market saw a shift in investor demographics in first quarter of 2024. Demand from Russian investors softened, while interest from European, American and Central and South American buyers increased. This trend is expected to continue throughout 2024, with buyers from Eastern and Western Europe, China, India and other GCC countries becoming key players,” Mannila said. Tuaima said foreign investors displayed considerable interest in Dubai's luxury property sector last year. “The continuation of this trend hinges on factors such as global economic conditions and the influence of currency fluctuations on investor behaviour. While some investors have genuine long-term objectives, others may be speculators seeking to exploit short-term changes in property values,” he said.
RISING DEMAND
Over the course of the past year, the real estate market in Dubai saw a remarkable influx of affluent private individuals from abroad. Demand was particularly high for properties in the premium segment, worth in excess of Dh10 million, which resulted in a 76 per cent increase in transactions in this price bracket. The highest number of sales was recorded in the traditionally sought-after Palm Jumeirah and Palm Jebel Ali districts.
Daniel Hadi, CEO of Engel & Völkers Dubai, said demand is especially high for off-plan properties in prime locations. This trend is particularly pronounced in the luxury segment due to the limited stock of prime-ready properties and reflects the market's evolution to meet diverse investor needs and residential aspirations of international High Net Worth Individuals (HNWIs).
“There is also strong interest for prime real estate in the up-and-coming areas Mohammed Bin Rashid City and Dubai Harbour, underlining their growing popularity as first-class residential locations and stable investments with excellent ROI potential,” Hadi said. Mannila said demand for ultra-luxury properties is at an all-time high and the segment has continued its strong growth into first quarter of this year.
“Off-plan sales continue to dominate with 75 per cent of the total sales. Waterfront properties and branded residences continue to be highly sought-after among investors,” he said. “At Penthouse.ae, we have reported record[1]breaking sales in March as we closed out a strong start to the year. Fuelled by Dubai’s thriving luxury property market, sales surged 100 per cent compared to the same quarter last year,” he added. “Also, our transactions in the first quarter alone were almost on par with our total sales from first half of 2023. Some of the biggest transactions in the first quarter included two luxury units at the Ela by Omniyat for Dh64 million and Dh50 million, respectively, two units at Ramhan Island in Abu Dhabi for a combined Dh60 million and an Dh30 million property at the Six Senses Residences in Dubai,” he said. Tuaima said there was a robust demand across all segments during the first quarter of 2024,. “Notably, properties priced above Dh5 million constituted 7.6 per cent of total completed sales, surpassing last year's average by 2.2 per cent. The first quarter of this year witnessed nearly 1,700 sales of both ready and off-plan homes valued at over Dh5 million, including 100 property transactions exceeding Dh30 million,” he said.
For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q1 2024
