The prime residential market in Dubai is expected to experience the highest growth rate globally, data from a leading property consultancy shows.
In 2023, the prime residential market in Dubai is projected to grow 13.5 per cent, the highest rate globally. “This growth is supported by a clear demand-supply imbalance and a positive economic backdrop,” Knight Frank said in its latest report.
However, despite the ongoing boom in sales and the consistent upswing in value across all sectors, Dubai’s residential unit prices remained 15 per cent lower than their 2014 peak.
In the first quarter, buoyed by an upsurge in demand from buyers, the residential market values in Dubai rose by 5.6 per cent, marking the ninth consecutive quarter of growth. The growth was, in particular, driven by strong demand for luxury second homes and the city’s emergence as a global luxury hub, according to data released by the property consultancy.
Branded residential sales, in particular, have seen a sharp rise since the start of the pandemic, driven by UHNWI demand. Developments such as Baccarat Residences in Downtown Dubai have achieved record prices, highlighting the growing popularity of branded residences in the city.
PNC Menon, founder, and chairman of premium real estate developer Sobha group, said: “Dubai has reinforced its position as one of the choicest markets in the global luxury residential segment in the wake of a string of investor and resident-friendly reforms initiated by the government. There has been a steady stream of high net worth buyers and investors to Dubai from overseas over the past months to set up homes allured by the city’s myriad attractions and advantages, including its image as the cleanest, safest, and friendliest residential destination in the region.”
Menon, who recently launched his first signature residential project, The S tower, said: “Going forward, the demand for luxury properties that offer elegant living experiences in this city of choice of the ultra-rich and celebrities will continue to rise.”
Faisal Durrani, partner – head of Middle East Research at Knight Frank, despite the current strong rate of increases, prices still lag the 2014 peak by 15 per cent. “Apartments have been slower to recover and still trail the last market peak seven years ago by 18 per cent. Villas, on the other hand, have equalled their 2014 peak and remain highly sought, particularly in the upper echelons of the market, with prices now 15 per cent higher than Q1 2022, with even more significant growth in prime neighbourhoods.”
The Knight Frank report noted that Dubai Hills Estate and Emirates Hills, for instance, have experienced sharp increases in prices as domestic buyer demand for larger homes fuels demand, particularly in more affordable inland communities. Dubai Hills Estate saw a 23 per cent increase in apartment prices in the last 12 months, making it one of the strongest gainers in the city.
According to the report, villas outperformed the market with an average growth of 5.1 per cent between January and March, reaching Dg1,450 per square foot (psf). In contrast, apartment prices increased by 5.7 per cent to approximately Dh1,230 psf during Q1.
Andrew Cummings, partner and head of Prime Residential at Knight Frank, said: “The current market conditions, combined with a return to steady and sustainable growth, will instill confidence in homeowners and investors alike.”
“Three-and-a-half years into the current market cycle, overall price growth is moderating as the extraordinary rises registered during the pandemic begin to work their way out of the equation. The bottom line however remains a significant mismatch between demand and supply of luxury homes. This combined with Dubai’s emergence on the global stage as the go-to second homes market continues to drive prices and indeed this is why over the last 12 months, prices have risen by 13 per cent, eclipsing 2022’s 10 per cent growth,” added Durrani.
The Palm Jumeirah has been the city’s star-performing villa market, with prices rising by 14 per cent during Q1 and a 53 per cent growth rate over the last 12 months. Knight Frank’s data reveals that villa prices on the iconic Palm Jumeirah have increased by an impressive 126 per cent since the start of the pandemic.
“The sustained strong demand for luxury homes from the international elite has significantly contributed to the 44 per cent increase in average villa prices across Dubai since January 2020. This level of growth has allowed villa prices to reach the last market peak in 2014, demonstrating Dubai’s emergence as a leading global luxury hub,” Cummings said.