According to a new report, Dubai’s prime residential market will experience strong double-digit price increases and lead global markets by 2023.
According to Knight Frank’s 2023 Prime Predictions, the price of prime residential areas will rise by 13.5 percent next year. This is the highest price growth worldwide, as cities such as New York, Paris and Singapore can only achieve single-digit growth.
According to the Dubai edition of the global property consultancy, luxury properties in the Emirate will continue to be in high demand and the prices are expected to finish the year at around 50% higher than in 2021.
Dubai’s status as a safe-haven
Faisal Durrani (partner and head of Middle East Research, Knight Frank) stated that Dubai’s prime residential market is a global outlier. The market saw record prices in 2022, even though it was built from a low base.
Durrani stated that Dubai’s status as a safe haven, an extraordinarily diverse group of international ultra-high-net-worth individuals looking for luxury second homes, and the government’s global-leading response to the pandemic has fuelled prime values.
Dubai is one of the most affordable luxury residential markets worldwide. Prime homes can be purchased for as low as $800 per square feet. This adds to its appeal. He said that overall residential prices are 21.4 percent lower than the 2014 peak levels.
Knight Frank stated in an earlier report that Dubai’s prime residential market will continue to grow due to strong investor demand. Palm Jumeirah is Dubai’s most affordable residential district. It has an average transaction price of Dh3,054/square foot (psf) relative to Emirates Hills (Dh5,220psf), and Jumeirah Bay Island (6,345psf).
Dubai is a resilient market
Atik Munshi (Managing Partner, FinExpertiza UAE) stated that the Dubai super-luxury real estate segment’s growth has not slowed down in the past year and will continue to grow in the future. He also expects the sector to be strong in 2023.
This rise has its merits. Dubai demonstrated to the world that it was one of the most desirable places to live through the handling of the Covid situation. Dubai is a safe place where UHNWI can enjoy luxury possessions, a low tax rate, long-term visas and minimal bureaucracy are just a few of the reasons that have made it renowned as a destination for the wealthy”. Munshi spoke to Khaleej Times Tuesday.
He said that the emirate had also attracted and fueled FDI to the country, apart from residential real estate. He stated that large investments will eventually percolate into other areas of the economy, helping them as well. However, it is important to monitor inflationary trends closely to reduce any negative effects.
Ata Showery is the chief executive officer of Zoom Property. She stated that Dubai’s prime market has attracted HNWIs and foreign investors for a while now.
It will reach its peak in 2023 after a strong 2022. Its potential and growth are evident in its expected strong growth over the next year. Shobeiry stated that this massive growth will not only benefit the real estate industry but also the economy in general.
Predictions for 2023
Knight Frank predicts that Dubai’s main residential market will see price increases of between 5-7 percent and a similar rate in 2023.
Durrani stated that prices for prime Dubai are expected to be around 50% higher than in 2021.
He stated that supply is another critical factor in our 2023 outlook. Only eight villas are expected to be built in Dubai’s prime precincts by 2025.
He stated that developers have not responded as expected to buoyant demand. With supply still limited and the demand for luxury waterfront increasing, our 2023 prime residential forecast at 13.5 percent is supported by a clear demand/supply imbalance and a positive economic background.
Encourage confidence in homeowners
Durrani stated that the UAE will be one of the fastest-growing economies in the world by 2022. Investors and homeowners alike will feel more confident if there is a return to sustainable and steady growth.
“Our outlook comes with risks. Dubai is a global city, and is therefore vulnerable to macroeconomic conditions. He said that Dubai has emerged as a safe haven again, as it did at the height of the Covid-19 pandemic.”
Prime global residential markets
Knight Frank’s global research network has found that prime residential prices are expected to rise by 2% in all 25 cities it tracks. This is a decrease of 2.7% predicted six months ago. Despite the slowdown, 2023’s aggregate growth would still surpass that of six years ago.
Knight Frank claims that after two years of the pandemic causing a rise in house prices in many global cities, the landscape has changed. The world is losing its economic power, and money is getting more expensive. The increasing cost of living is a major concern for homeowners.
The unpredictability of rising inflation, higher taxes and increased debt. Prime markets are less vulnerable to the effects of rising mortgage costs but they are not immune.
Many prime residential areas are already experiencing the transition from sellers to buyers. Knight Frank’s analysis shows that prime residential prices will need to drop by between 30-40 percent in certain cities to reach their pre-pandemic levels.