Dubai’s luxury real estate market is booming as wealthy buyers flock to the city

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According to real estate consultant Knight Frank, high-end property prices in Dubai have jumped 89% in the past 12 months, buoyed by a deluge of wealthy buyers setting up second homes in the city.

“Insatiable demand” has fueled villa price increases of more than 100% in upscale areas such as Palm Jumeirah, Emirates Hills and Jumeirah Bay Island since the start of the pandemic, according to the consultancy. The recovery is a significant departure from the emirate’s two previous market cycles, which were largely driven by buy-to-let or buy-to-flip buying.

Demand for properties in Dubai is booming as the government’s handling of the pandemic and its liberal visa policies attract more foreign buyers. The luxury part of the emirate’s property market is benefiting from an influx of wealthy investors such as Russians seeking to protect their assets, bankers fleeing strict Covid restrictions in Asia and wealthy Indians looking for second homes.

Dubai sets new real estate record with sale of $82 million mansion

“Prime residential values ​​in Dubai continue to strengthen, rising 29% in the third quarter alone, fueled by a continuing deluge of ultra-high net worth individuals who are concentrating on Dubai’s prime neighborhoods in search of residences. secondary,” said Faisal Durrani. , head of Middle East research at Knight Frank.

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Sales of properties over $10 million also hit a new high. In the first nine months of the year, there were 152 so-called ultra-prime sales, eclipsing last year’s 93.

In another change from previous cycles, the number of planned new luxury homes is failing to keep up with demand, creating a shortage for waterfront homes in particular.

“We see that only 8 new villas are planned in Dubai’s main residential areas between 2023 and 2025 – all located on the island of Jumeirah Bay,” Durrani said. “Developers have yet to rush new projects to market as we have seen in the past to capitalize on the tsunami of demand for luxury housing.”

In the short to medium term, Knight Frank expects prices to rise 5% to 7% by the end of the year, ending 2022 around 60% to 80% higher than last year.

A strong dollar and rising interest rates could impact the market, although the prevalence of cash buyers should “protect the market to some extent,” he said.

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