Due to investors’ desire to take advantage of any sales opportunities to invest in the emirate’s specialized housing market, there is a significant demand for ultra-prime residential properties in Dubai. As a result, prices have increased this year by at least 15%.
According to the international real estate consultancy Knight Frank, the city’s most sought-after neighborhoods are in high demand, and there is a limited supply, which is contributing to record price growth.
Only eight new residences, according to Knight Frank, are anticipated to be finished in the “Prime Dubai” neighborhood, which comprises Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island, between 2023 and 2025.
According to Faisal Durrani, partner and head of Middle East Research at Knight Frank, the acute lack of fresh supply and voracious global demand have caused premium residential prices to rise by an incredible 70.3% over the past year.
“The caveat to this stellar growth is that average transacted prices in these exclusive precincts stands at Dh2,900 per square foot, or $ 800, making Dubai one of the most ‘affordable’ luxury residential markets in the world – it is in fact four times cheaper than prime neighbourhoods in New York, or London,” Durrani said.
Another record year for ultra-prime sales
According to Knight Frank, there will certainly be a new record set in home sales for $10 million in 2022.
“Provisionally, we’ve had 82 ultra-prime deals during the first six-months of 2022 — these are homes priced at over $10 million. Last year, the market recorded 93 ultra-prime sales, which was an all-time record. At the time, it meant that 2021 had registered nearly 40 per cent of all ultra-prime home sales ever recorded in Dubai. 2022 looks set to eclipse this by some way,” Durrani pointed out.
Investors eye Dubai luxury homes
Knight Frank’s data shows that purchasers from all over the world are still flocking to Dubai’s most opulent properties.
According to Knight Frank, a variety of second-home buyers and investors are now coming from South America and Eastern Europe in addition to Monaco, Austria, Switzerland, India, Singapore, mainland China, the UK, the US, and the GCC.
“And those that are in search of yields are finding a market where rental growth has kept pace with capital value increases, meaning there has been no yield compression. On average, rental yields for apartments and villas hover around six percent and four percent, respectively, though these figures are significantly higher in areas where demand for short-term rentals is high,” Andrew Cummings, partner and head of Prime Residential at Knight Frank, said.
While premium Dubai is predicted to have a spike of closer to 15% over the same period, Knight Frank anticipates prices to conclude the year five to seven percent higher than they were in December 2021.
Prices sustain an upward trend
According to Knight Frank, home values in Dubai have risen for the second consecutive quarter and are currently 10.1% more than they were last summer, with prices averaging Dh1,100 per square foot.
“Price rises in Dubai have been sustained in the second quarter, albeit we have noted a slowdown in the rate of growth. Nonetheless, the mainstream market has seen the growth of 10.1 percent in the last 12 months, with villas continuing to lead the charge. In fact, villa values are now 19.3 percent higher than this time last year. The emerging tone for pricing is one of the less steep rises,” Durrani said.
Knight Frank claims that after a year of remarkable rise, values are rising more steadily. Indeed, from nearly 20% at the end of March and 21% at the end of last year, the annual change in villa prices has decreased.
Knight Frank nevertheless emphasizes the continued outperformance of demand and prices at the very top of the market, where demand has not only held consistent but has also grown more intense.
“Villas at the very top of the price spectrum in Dubai’s most expensive neighborhoods continue to record strong price growth, which is lifting entire markets. On Palm Jumeirah, villa prices have grown by 51 percent in the last 12 months and by 68 percent since the onset of the pandemic, highlighting the extreme depth of demand for the city’s premiere homes. Not to be outdone, prices for villas in District One and Dubai Hills Estate have also expanded by an impressive 30 percent over the same period,” Durrani said.