Prime residential values in Dubai are expected to keep the upward momentum in 2024 after recording the world’s second-highest growth rate in 2023.
Knight Frank’s 2024 global prime residential markets forecast positions Dubai in third place at 5.0 per cent. This comes hot on the heels of an estimated 16 per cent rise in prime residential prices in 2023 and building on the 44.4 per cent rise registered in 2022.
Of the 100 markets tracked in Knight Frank’s Prime International Residential Index, 80 recorded flat or positive annual price growth. Across the world, prices of luxury property increased by an average of 3.1 per cent in 2023 with Manila (26 per cent) leading the rankings and Dubai (15.9 per cent) in the second spot. The Bahamas (15 per cent) comes in third place with the Algarve and Cape Town (both 12.3per cent) completing the top five.
PNC Menon, chairman and founder of Sobha Realty, said the UAE’s luxury real estate market would remain robust in 2024 due to the sustained demand for prime properties driven by a growing influx of foreign investors. “In particular, Dubai, ranked among the world’s most affordable luxury markets, has been able to better position itself as the destination of choice for high net worth buyers and business investors thanks to the diversity of prime properties available for purchase.”
He noted that the luxury real estate industry is modifying its strategy in response to the shifting economic environment by focusing on technological integration, immersive virtual experiences, and sustainable practices. “Smart houses, eco-friendly architecture, and wellness-focused amenities are becoming increasingly popular in response to the evolving needs and values of luxury property buyers,” said Menon.
According to Knight Frank, prime residential values in neighbourhoods including the Palm Jumeirah, Emirates Hills and Jumeirah Bay Island have experienced record growth during 2023, albeit this has been from a low base.
Faisal Durrani, partner and head of Research, Knight Frank Mena, said the total number of prime homes available for sale declined by 38.5 per cent in Dubai during 2023, echoing the 52 per cent decrease in sales inventory in Dubai’s Burj Khalifa over the same period. “Owners are clearly deciding to hold on to their homes for longer, with inventory levels falling sharply, signalling the longer-term residency mindset now bedding in amongst the increasingly dominant buy-to-hold purchasers. Unsurprisingly, this behaviour has helped to sustain price growth in the emirate’s prime market, which registered the second fastest rate of growth globally in 2023 at 15.9 per cent”
“The accolades for Dubai’s prime market are piled high following the city’s record-breaking 431 $ 10 million+ home sales, including an all-time high of 56 properties trading for over $25 million last year. Despite the record-breaking sales of luxury homes, Dubai ranks towards the bottom end of the most expensive prime markets globally,” Durrani said.
“Indeed, in our global tracker of 15 prime residential markets around the world, $ 1 million secures 979 square feet of residential space in Dubai, three-times more than London, New York, or Singapore and about 806 square feet more than first-placed Monaco, where $ 1 million buys around 172 square feet of space. Dubai remains one of the most affordable luxury markets in the world, which only adds to its appeal among the international elite who dominate the upper echelons of the market,” said Durrani.
“Dubai’s residential market is no longer emerging. It has emerged. The nature of buyers in the market is testament to this shift, as is the type of real estate being developed in the city, much of which would not look out of place in other global cities,” said Will McKintosh, regional partner and head of Prime Residential, Knight Frank Mena.
He said Dubai’s relative affordability, combined with an unparalleled lifestyle offering in one of the safest cities in the world means not only are international second home buyers zeroing in on the emirate, but residents in the city are staying for longer and putting down roots, which is fostering the emergence of highly sought-after communities away from the luxury beach-front mansions. “For instance, we found a balance in Jumeirah Islands, which offered both in terms of tranquil lake views, newly renovated contemporary style homes and convenient access to local amenities.”
According to an analyst at a real estate consultancy that has analysed prime residential capital value growth in 30 major cities worldwide, Dubai and Sydney will be the top performers in the real estate market in 2024.
Dubai’s prime residential capital values surged by 17.4 per cent over 2023 and the average growth recorded 2.2 per cent across 30 cities. It is expected that property demands will grow between 4.0 per cent and 5.9 per cent in 2024. “Dubai holds numerous factors which generate property demand. It’s the most affordable city for home buyers with average capital values of $850 per square foot. Also, the city’s low cost of living, warm climate, world-class infrastructure, safety and stability and business-friendly environment make it the preferred choice for investors.”