The emirate’s prime markets, which include Emirates Hills, Jumeirah Bay Island and The Palm Jumeirah, collectively registered a price appreciation of 44 per cent last year, global consultancy Knight Frank said in its latest report on Monday.
“The meteoric rise of Dubai’s multimillion-dollar homes market over the course of the last two years has been phenomenal,” said Faisal Durrani, partner and head of Middle East Research at Knight Frank.
“From just 11 ultra-prime sales in 2010, 2022 has registered … more than the total recorded between 2010 and 2020.
“The performance at the top of the market clearly demonstrates the arrival of Dubai as a luxury hub to rival long-established markets elsewhere, with no sign to suggest a slowdown in the seemingly relentless demand from global ultra-high-net-worth-individuals zeroing in on the emirate in search of second homes.”
The UAE remains the second-most likely target — after the UK — for a home purchase this year by the region’s wealthy, Mr Durrani said, citing the consultancy’s 2023 Global Attitudes Survey.
Property prices in the emirate rose across all segments of the market last year amid a wider economic recovery from the coronavirus-induced slowdown.
Business activity in Dubai's non-oil private sector economy remained strong in December.
The emirate's seasonally adjusted S&P Global purchasing managers' index reading edged higher last month to 55.2, from 54.9 in November, firmly above the neutral 50 mark separating expansion from contraction.
A lack of supply has also driven up prices in the emirate’s ultra-luxury market as the number of new high-end homes planned is not enough to keep up pace with growing demand, Knight Frank said in November.
However, the emirate remains one of the world’s most affordable luxury home markets, which is further boosting the city’s appeal among international buyers, the report said.
Dubai’s prime residential market registered transactions worth Dh30.7 billion ($8.35 billion) in the fourth quarter of 2022, reflecting a volume growth of about 40 per cent from the third quarter, a seperate report by Luxhabitat Sotheby’s International Realty found.
The average price of property in prime areas was Dh6.9 million, with 9,836 units sold, it said.
“The past quarter was characterised by sharp increase in price in specific prime areas,” said Chris Whitehead, managing partner at Luxhabitat Sotheby’s International Realty.
“This steep rise in prices is being driven primarily by interest in high-end branded residences, with some of the preferred prime areas such as Jumeirah Bay seeing investors willing to pay any price.
“When it comes to villas, investors are demanding ready and fully fitted units in beachfront areas such as [The] Palm Jumeirah, with several transactions over the Dh140-million price point.”
Villas on The Palm are the most expensive in Dubai, with average transaction prices at about Dh3,250 a square foot, according to Knight Frank.
Mr Durrani said the district remained the city’s “star performer, with villa prices increasing by 49.4 per cent last year, underpinned by a shortage of new waterfront villa projects in completed communities”.
“The exceptional demand for homes on Dubai’s iconic Palm Jumeirah is best reflected in the fact that villa prices have risen by 96 per cent since the start of the pandemic, but remain at about Dh3,000 per square foot.”
The prices of villas in Mohammed bin Rashid City appreciated by about 22 per cent while Dubai Hills Estate registered a more than 20 per cent rise in rates in 2022, according to Knight Frank.
The Palm has been the location for a number of Dubai property records this year. Alpago's Casa Del Sole villa sold for a record Dh302 million while there was also a rental record set recently after a villa was leased on a six-month basis for Dh4 million.
Apartment prices also increased last year in Dubai's most sought-after locations. Dubai Hills Estate led with a jump of about 22 per cent, followed by The Palm with a rise of about a 20 per cent, Knight Frank said.