Dubai’s Luxury Home Sales are on a Roll Yet Again
There is still enough demand for $10 million homes in Dubai from the world's wealthy.
Season 2 of the Dubai real estate market's comeback is going just as well as the first and doing even better in the super-premium end of the villa and mansion category, where demand is as high as it was in 2021.
That's right, 2022 has all the makings of another banner year for Dubai and its luxury homes, both built and under construction. Sure, the first few weeks of January were relatively quiet in terms of high-end home transactions, as investors took a breather and the property market regained its footing following the Omicron spread. Even as the world grapples with the Russia-Ukraine conflict and its fallout, all doubts will dissipate by the beginning of March.
"When it comes to super-luxury homes in Dubai, it's a seller's market." "We had a firm interest from a buyer for a Dh180 million home, only to be told by the owner that he could only sell it for Dh250 million," said Firas Al Msaddi, CEO of fam Properties.
Based on market feedback, this seller won't have to wait long to get what he wants.
It may not have been obvious at the time, but the series of steps taken by the UAE to combat the pandemic and bring it under control had a significant impact on the recovery of Dubai real estate after a five-year decline in value. Then came the re-opening of travel to Dubai in July 2020 – "That's when the global rich started to frequent Dubai because there was no other place open," said Al Msaddi. "Dubai became their primary or secondary residence, or their winter vacation destination."
It is reflected in the 2021 figures. According to a report released Tuesday (March 8) by Knight Frank, the UK property consultancy, 93 homes worth $10 million or more were sold in Dubai last year. Those 93 high-value homes are more than the previous five years combined.
"The international elite's appetite for Dubai's most luxurious homes remains insatiable," said Faisal Durrani, Partner and Head of Middle East Research at Knight Frank. In fact, since 2010, 2021 has accounted for 39% of all $10 million home sales in Dubai. This demonstrates the phenomenal depth of demand at the market's top end.
Dh100 million in villa sales and Dh1 million in rent
In total, Dh114 billion was sold in the Dubai property market last year, with a handful of Dh100 million plus homes on the Palm being among them. (There were even rentals for Dh1.5 million to Dh1.7 million—it was that kind of year.)
A distinct category
More super-premium properties are being prepared for launch by Dubai's developers. Sure, they'll have to account for the uncertainties brought on by the Russia-Ukraine crisis, such as higher building commodity costs, and so on. However, at the premium end of the market, there is a strong likelihood of a repeat performance.
"Given Dubai's location, it will continue to attract high net worth investors, and such projects will continue to be launched," said Niraj Masand, Managing Director at Artha Realty. "We are aware of three to four projects that are awaiting approvals, with units starting at $2 million."
Beyond the Palm
There are a few projects that will be completed soon in some of the most desirable areas of the city. Furthermore, the Palm will continue to have more desirable properties, such as Sharjah's Arada and the "Palm Flower," which will be designed by the renowned Foster + Partners in the United Kingdom. Another nearly completed project is a penthouse with a Dh180 million price tag that is looking for a buyer.
Beyond the Palm, there's District 1 and the Dubai Hills Estate, and Sobha Realty is working on a $4 billion project next to its Hartland.
According to Durrani, the top end of the Dubai real estate market operates on its own timetable. "Everyone's big question is whether this is the start of another price bubble," he said. "The answer is that it's complicated, but most likely not. It all depends on the price points you consider.
While supply remains a persistent downside risk, the total stock in "Prime Dubai" represents only a fraction of the overall market. In 2022, only 3.6% of what is planned will be delivered in prime sub-markets, where demand is increasing, implying that there is still room for further price increases in this segment of the market.
Dubai's property market is both resistant and dynamic. With the UAE's real estate market being an excellent choice for long-term overseas investors, the prospects for the city's luxury homes are bright. "The real estate market in Dubai continues to excite a lot of investors," said Nisarg Trivedi, Director-Middle East, Schroders Investment. "I believe investors are still optimistic about the future of Dubai real estate, and given that Dubai is becoming a hotspot for global finance and trade—even more preferred than some other financial centers—this trend is bound to continue." -Justin George Varghese
There is room for more.
Al Msaddi of FAM Properties is confident that more global jetsetters will continue to "discover" Dubai. He said, "There will always be a home that fits their flexible budgets." If there isn't one, a developer will always be able to create one for them. It's just a matter of being patient.
Source: Gulf News