According to Knight Frank's most recent research, prime residential values in Dubai, have increased by 88.8% over the past year. These include the neighbourhoods of Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island.
Due to a constant influx of ultra-high net worth individuals who are focusing on Dubai's elite neighbourhoods in quest of second homes, prime residential prices in Dubai have continued to improve and increased by 29% in Q3 alone. The two prior market cycles in the emirate, when buy-to-let or buy-to-flip purchases were the predominant buyer preferences, notably differ from this pattern.
Since the beginning of the pandemic, this insatiable demand has caused villa prices to increase by almost 100% in places like Palm Jumeirah. Additionally, sales of ultra-Prime homes—those costing more than $10 million—have reached a new peak.
The 152 ultra-Prime sales reported over the first nine months of the year surpass the ninety-three sales recorded during the same period the previous year. Ninety-three of these transactions occurred in Q3 alone.
COST OF DUBAI’S PRIME RESIDENTIAL PROPERTY
In comparison to Jumeirah Bay Island (AED 5,220 per square foot) and Emirates Hills (AED 3,054 per square foot), Palm Jumeirah is still the most expensive of Dubai's three prime residential neighbourhoods at AED 6,345 per square foot.
Dubai’s most expensive villa in Palm Jumeirah recently sold for AED 302.5 million.
Dubai's prime residential neighbourhoods continue to be among the most affordable in the world, costing around AED 3,200 per square foot, or roughly US$ 870 per square foot. This is solidifying Dubai's place as one of the top markets for second homes worldwide, together with the high-quality residential property that is now universally accessible in the market.
This accessibility on top of a highly transparent real estate market has also led to significant capital growth in Dubai. Dubai ranks as the city with the fourth-greatest prime residential capital growth within the first half of 2022. This also positions Dubai as the only city outside the US to rank within the top 5 cities for prime residential capital growth.
SHORTAGE OF LUXURY HOMES
According to Knight Frank, Dubai has consistently had difficulties due to its build-it-and-they-will-come mentality. This has led to the construction of more homes than the market can support. But throughout this current cycle, the number of new homes being developed is decreasing to meet the demand.
The city looks to be sufficiently supplied, with roughly 81,000 units scheduled to be completed by the end of 2025. Yet, only 8 new villas, which are all located on Jumeirah Bay Island, are scheduled to be built in Dubai between 2023 and 2025. As witnessed before, developers are not yet hurrying to bring new prime residential projects to market. This is to take advantage of the surge in demand for luxury homes.
Properties that would not appear out of place in other luxury-infused cities are sought after by foreign purchasers. In response, developers are altering the residential environment with contemporary homes that make significant use of windows and ultra-modern features. The worldwide elite is particularly fond of smaller, more private developments. This means that the days of Mediterranean-themed residences in Dubai are gradually fading away. The preference nowadays is for ultra-modern constructions that are quickly taking over. Take the recently revealed Pagani-infused luxury apartment developments in Downtown Dubai as an example.