The property market in Dubai has been the centre of attention for investors worldwide as the city’s luxury property sector experiences an unprecedented boom, making it a high-value investment avenue.
The surge in demand, particularly from overseas buyers, and a simultaneous decrease in supply, has led to a significant rise in property prices, especially within the luxury segment, but, despite the increases, the market remains attractive to international markets where it is still seen as excellent value for money with a high return on investment.
Dubai’s luxury property market, which includes esteemed locations such as The Palm Jumeirah, Jumeirah Bay Island, and Emirates Hills, has seen prices escalate by more than 26 per cent in the previous year, according to leading property consultancy Knight Frank.
This rapid growth has primarily been fuelled by a surge in overseas demand for prime residences in the emirate.
Record-Breaking Sales
In the first quarter of 2024, there were 105 recorded sales of homes priced at more than $10 million, marking a 19 per cent increase compared to the same period the previous year.
The total value of luxury homes sold in Dubai during the first quarter was $1.73 billion, up 6 per cent from the same period in 2023. This growth further bolsters Dubai’s position as a leading market for luxury home sales internationally.
Attracting Global Wealthy Investors
Dubai’s global connectivity, favourable interest rates, and policies that encourage long-term residency have helped maintain the interest of wealthy overseas buyers in its property market. There has been a high demand in the prime residential sector, leading to a sharp fall in supply.
The volume of $10 million-plus homes for sale has fallen by 59 per cent across the city over the last 12 months, demonstrating the city’s attraction to international high-net-worth individuals.
Affordability Amidst Increasing Prices
Despite the soaring prices, Dubai’s luxury homes market remains one of the most affordable in the world. In comparison to other global cities, $1 million can secure a significantly larger amount of prime residential space in Dubai.
This affordability, coupled with the city’s luxurious lifestyle and high standard of living, continues to attract a growing number of investors.
Future Predictions
The future growth of Dubai’s prime market is predicted to be more moderate, with an expected increase of 5 per cent this year. However, potential external risks such as a global economic slowdown or an escalation in regional tensions could potentially impact this growth.
Dubai Hills Estate: A Rising Star
Dubai Hills Estate has been identified by Knight Frank as one of the fastest-growing prime areas for domestic buyers in the emirate. Its proximity to Downtown and new Dubai, combined with excellent neighbourhood facilities and green spaces, is making it one of Dubai’s most desirable neighbourhoods.
The Role of Off-Plan Properties
Off-plan properties have played a significant role in the increase in sales in the first quarter of the year. Several high-end off-plan projects have been launched on Palm Jumeirah in recent years, and their sales have contributed significantly to the overall growth of the luxury real estate market.
The Evolving Rental Market
With the rising demand for short-term rentals, some landlords in Dubai are setting a minimum lease duration. The rental prices across all communities have seen a consistent upward trend, primarily due to the growing presence of high net-worth individuals and positive changes in the UAE’s global financial standing.
Tenant and Landlord Preferences
Tenants, especially millennials, are seeking flexibility in lease terms, co-living arrangements, and pet-friendly policies. Landlords who accommodate these preferences may attract a wider pool of renters. On the other hand, landlords typically seek timely rent payments, set a minimum lease duration, and require adherence to building rules.
Banking and Real Estate Stocks to Perform Well
Banking and real estate stocks in the UAE are expected to perform well this year, primarily due to the strong dividends they have been paying to shareholders. The UAE equity market is about dividend yields, and this trend is likely to continue this year.
Performance of Banks and Real Estate Developers
Banks and real estate developers are expected to have a good year owing to strong deliveries in 2024. Banks, in particular, are projected to maintain their dividend payout in 2024, which is positive for both Dubai and Abu Dhabi banks.
Dubai’s property market has proven to be a high-value investment avenue that attracts domestic and international investors. The city’s strategic location, robust infrastructure, and investor-friendly policies make it an ideal destination for property investment.
Whether it’s the luxury homes on Palm Jumeirah or the modern apartments in Dubai Hills Estate, there’s something for every investor in Dubai’s diverse property market.
