Dubai’s luxury real estate market is poised to continue booming in 2023, with a deluge of international ultra-high-net-worth investors flocking to the city amid economic and geopolitical uncertainty elsewhere.
Gulf Business has shed light on the key factors providing an impetus to the substantial influx of private wealth for ultra-luxury properties in UAE over the last year.
The sale of prime real estate in Dubai increased 89% in October 2021 from the previous year—a speedy recovery from a steep slump prevailing from 2014 to 2020. Dubai’s real estate market climbed so fast that it caught many off guard.
Dubai Luxury Real Estate Market Booming
2023 is witnessing a sharp rise in the demand for properties in the city’s prime and super prime enclaves, such as Downtown Dubai, Dubai Marina, Palm Jumeirah, Jumeirah Bay, and Business Bay.
Luxury prime properties in Dubai have been transacted for a whopping 7235 dirhams per sq.ft. in the first quarter of the year—a jump of 16% from 6,250 dirhams per sq.ft. registered in 2022.
Driving Forces Behind Dubai’s Luxury Real Estate Market Boom
The global upheaval has seen a flight of capital from Commonwealth of Independent States (CIS) countries recently, and Dubai’s luxury property market has proven to be a prime benefactor due to its faster recovery from the pandemic crisis.
The ultra-luxury hotels, exclusive penthouses, and villas with exquisite views are helping Dubai cement its iconic position in the luxury real estate market, thus making it the preference of wealthy buyers.
The hiking interest rates, soaring inflation, and deep recession looming over the West are unlikely to dent Dubai’s real estate market growth.
Again, UAE’s tax-free regime, pro-business policies, and easy mortgage plans are some key factors incentivising investors worldwide to snap up properties in Dubai.
However, mortgage transactions account for only a quarter of overall property deals in the city as most properties are bought by high-profile investors who are less bothered by mortgage rates.
Off-plan payment structures which offer post-handover payment plans to investors, have made Dubai’s real estate top the customers’ list. Off-plan payment enables investors to rely less on borrowing, effortlessly adapt to foreign exchange fluctuations, and use strategies to retain their wealth.
The city’s excellent climate, safety, and unrivalled sun-sea-sand lifestyle have scintillated a terrific comeback leading to a meteoric rise in luxury property sales. Case in point: Dubai’s luxury real estate market has been ranked fourth globally, closing in on New York (NY), Los Angeles (LA), and London.
In 2022, this Middle Eastern real estate business hub racked up 219 property sales valued at USD 10M or more, compared to 93 in 2021—a jump of 135%.
By comparison, NY recorded 244 sales worth around $10M, LA 225 transactions, and London 223.
The fast development of townhouses and apartments with a brand name has long been considered a key factor in buoying Dubai’s property market. Around 48 branded projects in Dubai are poised to be delivered in the next few years.
Again, with millionaires preferring contemporary design, interior design services in Dubai, such as Accouter, are getting a push. High-end interior design studios can turn exclusive spaces into exquisite residences while ensuring a superior living experience.
Despite soaring prices, Dubai’s luxury real estate market is set to see substantial growth this year with record-high sales.