Dubai registered the highest number of residential sales valued at more than $10 million worldwide in the second quarter of 2023, driven by rising demand for luxury homes in the emirate, according to a new report by global consultancy Knight Frank.
Dubai, the commercial and tourism centre of the Middle East, outpaced sales recorded by 11 other cities – including New York, London, Paris, Hong Kong, Sydney and Singapore, among others – during the period, having sold 95 homes worth more than $10 million, up from 53 during the same period last year, according to the report.
While Dubai led with a total volume of $1.5 billion, London and New York also recorded sales above $1 billion, the report said. Total sales volumes for the second quarter of 2023 amounted to $7.3 billion across the 12 markets.
However, total sales among the 12 cities covered by Knight Frank fell 13 per cent to 483 against a backdrop of higher interest rates globally.
Central banks continued to raise interest rates to control inflation. After pausing its tightening cycle in June, the US Federal Reserve increased its policy rate in July for the 11th time since March 2022, as it aims to bring inflation down to its 2 per cent target range.
Sales in the 12-month period up to June of this year are still running well ahead of the pre-pandemic levels at 1,638 globally, the data shows. Total sales in 2019 were 1,009.
“Super-prime sales globally have retreated from recent highs but are still outpacing pre-pandemic levels,” said Liam Bailey, global head of research at Knight Frank.
“Dubai continues to lead the pack but London and New York are still seeing healthy volumes. The biggest constraint across a majority of markets in the near term is supply – a lack of new development starts between 2020 and 2022 means a lean 2024 for new delivery, pointing to rising competition for available stock, which should act to put a floor under pricing.”
Demand for luxury homes continued to rise in Dubai, driven by higher demand from wealthy individuals.
Global high-net-worth individuals (HNWIs) plan to spend $2.5 billion on Dubai property this year, Knight Frank said in a report in May.
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, it said.
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 ranked Dubai behind New York (244 sales), Los Angeles (225 sales) and London (223 sales).
Total sales in the 12 months up to June in all markets stood at under $30 billion, down from the peak of $40.7 billion in 2021 but well ahead of the pre-pandemic figure of $18.6 billion in 2019, Knight Frank's latest report said.
“While US housing markets have faced challenges gaining traction this year, primarily due to the impact of higher interest rates, the super-prime New York market has shown greater resilience thanks to a substantial presence of cash buyers,” it said.
“Additionally, in the second quarter, there has been an increase in demand from affluent families purchasing properties for their children to use during their schools or university years. Moreover, there is emerging evidence of demand from Asian buyers seeking alternatives to Singapore following the implementation of higher stamp duty rates in that city. “
In April, Singapore raised taxes on private property purchases to cool the property market.
“Singapore’s super-prime market is experiencing a squeeze in sales volumes due to high purchase taxes, reaching up to 60 per cent for foreign buyers in some cases," the report said.
“Although the city has been successful in attracting wealth management and family office investments, this interest has not translated into increased sales activity, as the market is adapting to rely more on domestic purchasers.”
London’s market, meanwhile, has remained relatively robust throughout 2023, although it has slowed compared to the levels seen in 2021, according to the report.
Overseas demand has played a role in boosting sales and recent development launches have contributed to the numbers. However, a squeeze in the future super-prime development pipeline in London "suggests a potential slowdown in sales activity in 2024 and beyond unless existing property owners can be encouraged to trade up or down from their current properties", the report said.
