In Dubai, the rich will have to spend more to buy their next villa as prices in key locations such as the Palm and Dubai Hills are up 14-18% this year. And prices may continue to rise.
Even off-plan launches in the super-luxury space are pushing the price envelope – Knight Frank estimates the apartments at Palm Flower are priced around Dh10,000 per square foot. In the project designed by Foster + Partners, there will only be one apartment per floor, and the top apartments will be priced at Dh200 million.
“$10 million-plus home sales now account for 7 percent for all transactions in the city by value compared to a long-term average of just 2 percent,” said Faisal Durrani, Partner – Head of Middle East Research at the consultancy Knight Frank. “The buoyancy in market sentiment has rippled outward from the emirate and caught the attention of a new flavor of buyer – non-resident, ultra-high net worth individuals, who for the first time are flocking to the city to secure our most expensive property.”
No waiting around
Most expensive areas in the city are experiencing the “sharpest turnaround in value”, with apartments in Palm Jumeirah (up 14 percent) and Downtown Dubai (up 8 percent) outperforming apartments (down 3.1 percent) in general, since the outbreak of the pandemic.
“Buyer habits have evolved over the course of the last 18 months (since the pandemic breakout),” added Durrani. In comparison, in the 18 months after 2009’s Global Financial Crisis, property values in Dubai were down by nearly 32 percent.
Those new buyers – from places like Monaco, Switzerland, and China – “are driving an even sharper rebound at the top of the market.”. Cheaper properties are still facing price pressure. The overall residential value is still 29 percent below the 2014 peak.
Third cycle
Total home sales in Dubai in September surpassed Dh12.2 billion – and doubled the previous September record of Dh6.1 billion. “While values are still creeping up, anecdotal evidence points to an emerging delta between seller and buyer expectations, [which is] a classic sign of a rising market that may soon stall,” said Durrani. “Total transaction volumes in October declined to Dh11.2 billion, still marking the busiest ever October for the market, but a decline on the previous month, nonetheless.”