About 22 per cent of the HNWIs are prepared to commit $5 million to $10 million on real estate in the emirate, while 8 per cent are ready to spend more than $80 million, according to the report by global property consultancy Knight Frank.
Last year, $3.8 billion was spent on homes in Dubai that were priced at more than $10 million.
The Knight Frank report polled 183 HNWIs globally, each with a net worth of more than $3 million, excluding their main home or primary residence. Combined, the group owns 851 homes globally and have a combined net worth of $3.2 billion.
“Dubai has reached a tipping point and instead of jostling for recognition, the city is going toe-to-toe with the world’s long-established hubs as a magnet for the world’s wealthy,” said Faisal Durrani, partner and head of Middle East research at Knight Frank.
“Outstanding transport infrastructure, unrivalled global connectivity and an exceptionally forward-thinking leadership has catapulted Dubai’s reputation and status globally, as evidenced by the unrelenting demand from international HNWIs to own second homes here or, indeed, relocate to the emirate.”
The UAE property market has continued to recover from the coronavirus pandemic on the back of government initiatives, higher oil prices and other measures to support the economy.
Property transactions in Dubai and Abu Dhabi surged last year amid higher demand from buyers.
Dubai's property market performance last year was described as “exceptional” by Crown Prince Sheikh Hamdan bin Mohammed, as the value of deals reached a new high of Dh528 billion, up 76.5 per cent annually.
The sector recorded a total transaction value of Dh157 billion in the first quarter of 2023, marking an 80 per cent annual increase, the Dubai Media Office said in April.
Expanding their property portfolio emerged as the primary reason to invest in Dubai for those with a net worth of more than $10 million, according to Knight Frank.
Forty-seven per cent of global HNWIs picked Dubai’s high-quality transport infrastructure as the top reason why the emirate is an attractive real estate investment destination.
Other reasons include Dubai’s emergence as a global tourism centre, the city’s recovery from the Covid-19 pandemic and a wide range of project availability, the report said.
Meanwhile, wealthy respondents who have never visited Dubai said the top two reasons why the emirate is attractive for those seeking to buy real estate are its status as a global tourist destination and zero tax on salaries, according to Knight Frank.
“World-class infrastructure, excellent connectivity and proactive government policies have caught the eyes of investors from Europe, East Asia and [the] Americas,” said Shehzad Jamal, partner of strategic consulting for real estate, health care and education.
“People from various jurisdictions are looking to relocate to Dubai, driving job and wealth creation rates, contributing further to a stable real estate market.”
Downtown Dubai and The Palm Jumeirah are the most preferred areas for wealthy respondents looking to buy property in the emirate, the survey found.
The Palm and Emirates Hills are favoured by wealthy investors from the UK, Europe and North America.
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For East Asian investors, Downtown Dubai emerged as a favourite, followed by Business Bay, according to Knight Frank.
Apartments are the more popular residential property type among global HNWIs, with 64 per cent favouring them, the report found.
However, among those with a net worth of more than $10 million, 53 per cent prefer to buy a villa in Dubai.
Knight Frank also observed a shift in preference from off-plan purchases to recently built or completed homes.
More than half (53 per cent) of HNWI buyers are focusing on acquiring newly constructed homes in Dubai, and this rises to 71 per cent among HNWIs from East Asia, the report revealed.
“With the surge in second-home purchases, particularly in locations such as Palm Jumeirah, the global elite are paying record prices to secure beachfront villas,” Mr Durrani said.
“They are subsequently spending almost the same amount again on customising these homes.”
Meanwhile, significant local and international demand from ultra-high-net-worth individuals, who have a net worth of $30 million or more, has boosted the prices of premium homes in Dubai.
In the first quarter, average prices for homes above $10 million reached Dh7,235 a square foot, a 16 per cent increase from 2022’s Dh6,250 a square foot, the report found.