Khaleej Times, Tuesday, Aug 16, 2022 | Muharram 18, 1444
Dubai ultra-prime luxury properties look set for a record year
Emirates: Dubai's ultra-prime residential
properties are in demand as investors are keen to grab every sales opportunity
to make an investment in the emirate's niche housing segment, pushing the prices
on higher side by at least 15 per cent this year.
Global real estate consultancy Knight Frank said the strong demand for the
city’s most desirable neighbourhoods, combined with restricted supply is helping
to drive record price growth.
Knight Frank said just eight new homes are expected to be completed between 2023
and 2025 in 'Prime Dubai' area that includes the Palm Jumeirah, Emirates Hills
and Jumeirah Bay Island.
Faisal Durrani, partner and head of Middle East Research at Knight Frank, said
the severity of the shortage of new supply, combined with insatiable
international demand has driven prime residential prices up by an extraordinary
70.3 per cent in the last 12 months.
"The caveat to this stellar growth is that average transacted prices in these
exclusive precincts stands at Dh2,900 per square foot, or $ 800, making Dubai
one of the most ‘affordable’ luxury residential markets in the world – it is in
fact four times cheaper than prime neighbourhoods in New York, or London,”
Durrani said.
Another record year for ultra-prime sales
Knight Frank said that $10 million home sales continue to intensify, with a new
record likely in 2022.
“Provisionally, we’ve had 82 ultra-prime deals during the first six-months of
2022 -- these are homes priced at over $10 million. Last year, the market
recorded 93 ultra-prime sales, which was an all-time record. At the time, it
meant that 2021 had registered nearly 40 per cent of all ultra-prime home sales
ever recorded in Dubai. 2022 looks set to eclipse this by some way,” Durrani
pointed out.
Investors eye Dubai luxury homes
According to Knight Frank’s analysis, buyers for Dubai’s most luxurious homes
continue to pour in from around the world.
Buyers and investors from locations across South America and Eastern Europe are
joining the diverse mix of second-home buyers and investors from countries such
as Monaco, Austria, Switzerland, India, Singapore, mainland China, the UK, the
US and the GCC, Knight Frank said.
"And those that are in search of yields are finding a market where rental growth
has kept pace with capital value increases, meaning there has been no yield
compression. On average, rental yields for apartments and villas hover around
six per cent and four per cent, respectively, though these figures are
significantly higher in areas where demand for short term rentals is high,”
Andrew Cummings, partner and head of Prime Residential at Knight Frank, said.
Knight Frank expects prices to end the year five to seven per cent higher than
December 2021, while prime Dubai is forecast to experience a rise of closer to
15 per cent over the same period.
Prices sustain upward trend
Knight Frank said residential values in Dubai have continued to rise during the
second quarter and are now 10.1 per cent higher than last summer, with prices
standing at an average of Dh1,100 per square foot.
"Price rises in Dubai have been sustained in second quarter, albeit we have
noted a slowdown in the rate of growth. Nonetheless, the mainstream market has
seen growth of 10.1 per cent in the last 12 months, with villas continuing to
lead the charge. In fact, villa values are now 19.3 per cent higher than this
time last year. The emerging tone for pricing is one of less steep rises,”
Durrani said.
Following the extraordinary growth last year, Knight Frank says values are
growing at a more sustainable rate. Indeed, the year-on-year change in villa
prices has slowed from about 20 per cent at the end of March and 21 per cent at
the end of last year.
Still, Knight Frank points to the ongoing outperformance of demand and prices at
the very top of the market, where demand has not only remained steady, but
continues to intensify.
“Villas at the very top of the price spectrum in Dubai’s most expensive
neighbourhoods continue to record strong price growth, which is lifting entire
markets. On the Palm Jumeirah, villa prices have grown by 51 per cent in the
last 12 months and by 68 per cent since the onset of the pandemic, highlighting
the extreme depth of demand for the city’s premiere homes. Not to be outdone,
prices for villas in District One and Dubai Hills Estate have also expanded by
an impressive 30 per cent over the same period,” Durrani said.