Dubai's luxury home sales hit Dh6 billion ($1.63 billion) in the first quarter of 2023, with wealthy buyers snapping up 88 units valued at more than $10 million as prime property sales continued to pick up amid a wider economic recovery.
The emirate's prime residential markets of Palm Jumeirah, Emirates Hills and Jumeirah Bay Island accounted for 64 per cent of luxury home sales during the three-month period, with average transaction prices in these high-demand locations reaching Dh8,800 per square foot, global consultancy Knight Frank said in a report on Tuesday.
“The depth of demand for homes at this price point from local and international UHNWIs [ultra-high-net-worth individuals] is helping to drive up prices in this exclusive segment of the market,” Faisal Durrani, partner and head of Middle East Research at Knight Frank, said.
Dubai, the Middle East's finance and tourism hub, registered average transaction prices of Dh7,235 per square foot in the first quarter for prime properties across the city — a 16 per cent increase on the Dh6,250 per square foot recorded in 2022, he added.
Last year, the emirate recorded the sale of 219 homes priced above $10 million, with the total value of the transactions reaching $3.8 billion. That ranks Dubai behind New York (244 sales), Los Angeles (225 sales) and London (223 sales).
Dubai's economic recovery from the coronavirus pandemic on the back of higher oil prices and investor-friendly government policies, including changes to visa rules to attract more investment, have buoyed its property market.
The emirate's economy expanded 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 data from the Dubai Statistics Centre.
Emirates NBD estimates Dubai's full-year 2022 growth at 5 per cent and expects the emirate’s GDP to grow by 3.5 per cent in 2023.
While Dubai’s prime neighbourhoods have dominated luxury home sales so far this year, other locations in the city are also rising quickly to prime status if they continue to entrench themselves as high-end neighbourhoods, the report said.
Up-and-coming areas include the Al Wasl-Dubai Canal and Tilal Al Ghaf, Knight Frank property experts said.
Branded residential sales at the Al Wasl-Dubai Canal corridor are “contributing to its emergence as a hotspot for UHNWIs who are focused on securing the most expensive homes in the emirate’s most desirable neighbourhoods”, Mr Durrani said.
At Tilal Al Ghaf, three homes were sold for more than Dh90 million last year and seven villas for more than $10 million in the first quarter of 2023, suggesting that the area will soon become classified as a prime neighbourhood, according to Knight Frank.
“While the bulk of international UHNWIs looking at Dubai are drawn to acquiring second homes on the coast, Tilal Al Ghaf has set a new benchmark for luxury living as an inland community that delivers on quality and amenities,” Andrew Cummings, partner and head of prime residential sales at Knight Frank, said.
Where to move to in Dubai - in pictures
Tight supply of luxury homes overlooking Dubai's waterfront areas may lead to growing popularity of these inland residential neighbourhoods.
“The shortage of completed waterfront communities and the lack of developments sites that can be easily activated suggests that such inland communities will continue to grow in prominence,” Mr Cummings said.
2023 outlook for Dubai's luxury homes market
Knight Frank forecasts that prime residential values in Dubai will rise by 13.5 per cent this year, positioning the city as the fastest growing residential market for the second consecutive year.
Last year, prices in Dubai’s prime residential market registered a 44 per cent growth and emerged as the world's fastest growing luxury market.
However, with $1 million securing 1,130 square feet in any of Dubai’s three prime neighbourhoods, the city is the 16th-most affordable luxury market in the world, according to the consultancy.
This means $1 million buys three times more prime residential space than cities like London, New York, or Singapore, it said.
“With a shortage of prime developments under construction and no slowdown in the relentless UHNWI demand for luxury second homes in Dubai, the upward trajectory for prime prices is likely to be sustained,” Mr Durrani said.
Overall, Dubai's property developers are set to record positive cash flow in 2023 for the fourth consecutive year on the back of healthy pre-sales and favourable payment terms S&P Global Ratings said last month.