Khaleej Times, Tuesday, May 16, 2023 | Shawwal 26, 1444
Dubai’s prime housing market set to record highest global growth
by Issac John
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.