Prices of Dubai homes worth more than $10m rose at second-fastest pace globally in 2023

The emirate remains one of the most affordable prime residential property markets worldwide, says Knight Frank

Dubai is ranked 13th on a list of the world's top 15 prime residential markets, according to Knight Frank. Bloomberg

Prices of prime residential properties in Dubai rose by more than 16 per cent last year, the second-fastest pace globally, as demand continued to remain strong amid a broader economic recovery.

The values of homes that cost at least $10 million in the prime neighbourhoods of The Palm Jumeirah, Emirates Hills and Jumeirah Bay Island experienced record growth last year, property consultancy Knight Frank said in a report on Wednesday.

Around the world, luxury residential property prices rose by an average of 3.1 per cent last year, with Manila topping the list of 100 markets tracked in Knight Frank’s Prime International Residential Index report.

Prices in the Philippine capital increased by 26 per cent while the Bahamas was in third place, with a 15 per cent increase in prices. The Algarve in Portugal and South Africa's Cape Town (both at 12.3 per cent) rounded off the top five.

“The total number of prime homes available for sale declined by 38.5 per cent in Dubai during 2023, echoing the 52 per cent decrease in sales inventory in Dubai’s Burj Khalifa over the same period,” said Faisal Durrani, partner and head of research for Mena region at Knight Frank.

“Owners are clearly deciding to hold on to their homes for longer, with inventory levels falling sharply, signalling the longer-term residency mindset now bedding in among the increasingly dominant buy-to-hold purchasers.”

This has helped to sustain price growth in the emirate’s prime market, he said.

Despite the record-breaking sales of luxury homes last year, Dubai is still ranked towards the bottom end of the most expensive prime markets globally, the report said.

With $1 million securing 979 square feet in any of the emirate’s three prime residential districts, the city was ranked 13th on the list of the world's top 15 prime residential markets.

In comparison, $1 million buys about 172 square feet of space in first-placed Monaco.

“Dubai remains one of the most affordable luxury markets in the world, which only adds to its appeal among the international elite who dominate the upper echelons of the market,” Mr Durrani said.

Knight Frank forecasts that prime residential values in Dubai will rise by 5 per cent this year, positioning the city as the third fastest-growing prime residential market globally, behind Auckland (10 per cent) and Mumbai (5.5 per cent).

Dubai's luxury home market hit record levels in 2023 as sales of $10 million-plus homes nearly doubled to $7.6 billion, performing better than London and New York, Knight Frank said last month.

While sales within the price bracket rose by 91 per cent last year, about a third (28 per cent) of the 431 transactions were completed in the final quarter.

Dubai's super-prime market – properties valued at more than $25 million – also surged last year, with 56 deals worth $2.3 billion – double the previous year's total.

The emirate, one of the main commercial, tourism and financial centres of the Middle East, has maintained its strong growth momentum since bouncing back from the coronavirus-induced slowdown.

Its economy expanded by an annual 3.3 per cent in the first nine months of last year, driven by growth in the tourism and transport sectors, government data showed last month.

Emirates NBD expects Dubai's gross domestic product to grow by 4 per cent this year, compared with a 3.3 per cent expansion in the UAE economy.