United Arab Emirates

Dubai luxury property market to maintain fastest growth rate in H2

فرشید فرزانگان 07/30/2023

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Dubai luxury property market to maintain fastest growth rate in H2

For illustrative purpose only

Waheed Abbas

Published: Sun 30 Jul 2023, 2:35 PM

Demand for Dubai’s luxury properties will remain strong in the second half of 2023 and will be the fastest growing market among all the major cities around the world on the back of the continued inflow of millionaires, with the market facing a supply shortage of high-end units.

Following an 11.2 per cent increase in capital value during the January-June period, industry analysts project another up to 10 per cent increase in prices of high-end units during the second half, maintaining the fastest growth rate for the whole year.

Importantly, the luxury segment will continue to drive the capital value of the mid and affordable units as well.

“With record-breaking sales prices and robust sales absorption, sales prices are expected to see steady increases in the range of 5-10 per cent over second-half of 2023,” said Prathyusha Gurrapu, head of research and consultancy, Core.

“While historically Dubai’s ultra-prime market has been considerably cheaper than other global cities, with the recent launch of many uber-prime properties and branded residences such as Bulgari Lighthouse, Como Residences, Baccarat Residences and Six Senses Residences, the gap is being bridged,” she added.

According to Savills Research, prices of prime residential property in Dubai will increase between 6 to 7.9 per cent in the second half of 2023, the fastest pace in the world, followed by Singapore and Bangkok.

“We forecast that Dubai will achieve the highest growth for the remainder of 2023, benefitting from the continued relocation of ultra-high net worth individuals,” said Paul Tostevin, director, Savills World Research, and Swapnil Pillai, associate director, Middle East Research at Savills.

“Since December 2020, average prime rents in Dubai have witnessed a significant increase of 62 per cent. The city has been successful in attracting UHNWIs from various countries, and this is particularly evident in the growth of branded residences in the city, a segment especially appealing to an international consumer base,” said Savills analysts.

New launches on the rise

In order to cash on unprecedented demand, Rizwan Sajan, founder and chairman of Danube Properties, said more than 15 projects were launched and nearly sold out at launch between June and July.

“It reflects a strong investor appetite, which I believe, will continue not only for the rest of the year but also continue well in 2024. Although the prices are significantly high compared to the lows of the Covid-19 pandemic period, it is still reasonable and in some cases, there is room for further growth. It is also good for property buyers and investors as the increased rental yield makes up for the increased price. So, for a Dh1 million apartment, investors can still count on Dh50,000 – Dh70,000 rent, which is between 5-7 percent annual return on investment,” said Sajan.

Prathyusha Gurrapu, head of research and consultancy, Core, said on the back of strong high net worth individuals demand from international and resident buyers and highly favourable socio-economic drivers, the Dubai ultra-prime and prime market is expected to continue witnessing a strong H2 2023.

“This is further evidenced by the successful launch and take-up of many luxury properties across Dubai,” she added.

No price ceiling for the luxury segment

Danube Properties chairman said when it comes to luxury property, there is no price ceiling. “This is why it is called luxury. We have seen in recent months villas sold at Dh100 million to Dh600 million a piece.

Generally speaking, there is further room for growth in the price of luxury properties. However, it all depends on the location, amenities and the quality of the product. There are one-bedroom apartments priced at Dh1.8 million that are being bought by buyers, and villas worth more than Dh100 million that are being sold out to ultra-high-net-worth individuals,” he added.

Even after a significant rise in the post-pandemic period Knight Frank’s Wealth Report said prime property prices in Dubai were cheaper by 20 to 80 per cent when compared to major cities such as Monaco, Hong Kong, New York, London, Geneva, Paris, Beijing, Tokyo etc.

According to Allsopp & Allsopp, the emirate’s ultra-luxury property segment recorded an impressive 176 deals with each exceeding $10 million, surpassing London, Paris and New York.

It said buyer registration skyrocketed by 84 per cent, resulting in a 28 per cent in overall sales, signalling an influx of new buyers keen to capitalise on Dubai’s real estate potential.

“We are thrilled to witness Dubai cement its position s the unrivalled global hub for luxury real estate. Our H1 2023 market analysts affirmed Dubai’s status as the preferred destination for homebuyers of ultra-luxury properties. We eagerly look ahead to H2 2023,” said Lewis Allsopp, CEO of Allsopp & Allsopp.