Dubai has been ranked as the world’s fourth most active market in the luxury residential segment as sales of prime properties continued to pick up amid a wider economic recovery, a new report said.
The emirate, the commercial and tourism hub of the Middle East, recorded the sale of 219 homes priced above $10 million last year, with the total value of the transactions reaching $3.8 billion, global property consultancy Knight Frank said in a report on Wednesday.
Dubai ranks behind New York (244 sales), Los Angeles (225 sales) and London (223 sales).
It is also the fifth most active city for sales of homes price above $25 million, with the same three cities plus Hong Kong ranking higher.
“The emirate has taken its place among long-established hub cities as one of the world’s most sought-after luxury residential markets,” Faisal Durrani, partner and head of Middle East Research at Knight Frank, said.
“The growing concentration of wealth in the city has been catalysed by a confluence of factors, ranging from the government’s decisive response to the pandemic to the roll-out of a range of new residency visa options,” he said.
Dubai’s luxury residential market “remains significantly undersupplied”, with just eight new villas expected in the city’s prime neighbourhoods until 2025, he added.
Dubai is also “more affordable than its global counterparts … adding to the overall appeal of owning a home in Dubai among the world’s elite. Indeed, $1 million in Dubai’s prime residential precincts translates into approximately 1,130 square feet of space, roughly five-times more than Hong Kong and three-times more than London or Singapore”, Mr Durrani said.
The emirate's property market has been buoyed by the recovery in its economy from the coronavirus pandemic on the back of higher oil prices and government policies, including changes to visa rules to attract more investment.
Dubai’s economy expanded by 4.6 per cent on an annual basis in the first nine months of 2022, with wholesale and retail trade accounting for 24.1 per cent of its gross domestic product, according to the Dubai Statistics Centre.
Emirates NBD estimates Dubai's full-year 2022 growth at 5 per cent. It expects the emirate’s GDP to grow by 3.5 per cent in 2023.
Dubai's property market also had a record-breaking year in 2022.
The market recorded 90,881 transactions last year, exceeding the previous high of 81,182 in 2009, property consultancy CBRE said in its Dubai Residential Market Snapshot report.
“With the strongest prime residential growth rate in the world forecast this year at 13.5 per cent, Dubai’s market still represents outstanding relative value,” Andrew Cummings, partner and head of prime residential at Knight Frank, said.
“It is this value that continues to drive UHNWI [ultra high net worth individual] buyers into our market, most of whom are seeking a sun-sand-sea lifestyle that is now synonymous with Dubai.”
The city's appeal is worldwide, but in 2022, “we saw a resurgence of investment from our traditional long-time stalwarts of the buyer nationality”, including from the UK and India, as well as Europeans, he said.
“Chinese investors have also bounced back post-pandemic, making Middle East residential investments very lucrative,” Mr Cummings said.
China reopened its economy in January after enforcing strict movement restrictions for many months to stem the spread of the pandemic.
“The rapid return to normality following the pandemic also attracted numerous businesses from Europe, the UK and Asia to establish offices here, or relocate their headquarters altogether, which has given rise to buyers from new markets such as Monaco, Switzerland, Singapore and Hong Kong,” Mr Cummings said.
Knight Frank’s 2023 Wealth Report also includes findings of its annual Attitudes Survey, with respondents including private bankers, wealth advisers and family offices naming the UK the most popular residential investment target for 2023, followed by the UAE and the US.
The report also said 37 per cent of UHNWIs in the Middle East grew their wealth in 2022 by more than 10 per cent, despite it being a year of slow global growth after the pandemic.