After registering the second-highest growth rate in the world in 2023, prime residential values in Dubai are predicted to continue their upward trajectory in 2024.
Dubai is ranked third at 5.0 percent in Knight Frank’s forecast for the global prime residential markets through 2024. This is directly after prime residential prices are predicted to rise by 16 percent in 2023, building on the 44.4% increase seen in 2022.
Eighty markets with flat or positive annual price growth were among the 100 markets monitored by Knight Frank’s Prime International Residential Index. The average increase in the price of luxury real estate worldwide in 2023 was 3.1%, with Dubai coming in second place with 15.9% and Manila leading the way with 26%. The Algarve and Cape Town (both 12.3%) round out the top five, with the Bahamas (15%) in third position.
The founder and chairman of Sobha Realty, PNC Menon, predicted that the UAE’s luxury real estate market would continue to be strong in 2024 because of the ongoing demand for prime properties being driven by an increasing number of foreign investors. “In particular, Dubai, ranked among the world’s most affordable luxury markets, has been able to better position itself as the destination of choice for high net worth buyers and business investors thanks to the diversity of prime properties available for purchase.”
He noted that the luxury real estate industry is modifying its strategy in response to the shifting economic environment by focusing on technological integration, immersive virtual experiences, and sustainable practices. “Smart houses, eco-friendly architecture, and wellness-focused amenities are becoming increasingly popular in response to the evolving needs and values of luxury property buyers,” said Menon.
Knight Frank reports that, despite starting from a low base, prime residential values in communities like Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island have experienced record growth during 2023.
Faisal Durrani, partner and head of Research, Knight Frank Mena, said the total number of prime homes available for sale declined by 38.5 percent in Dubai during 2023, echoing the 52 percent decrease in sales inventory in Dubai’s Burj Khalifa over the same period. “Owners are deciding to hold on to their homes for longer, with inventory levels falling sharply, signaling the longer-term residency mindset now bedding in amongst the increasingly dominant buy-to-hold purchasers. Unsurprisingly, this behavior has helped to sustain price growth in the emirate’s prime market, which registered the second fastest rate of growth globally in 2023 at 15.9 percent”
“The accolades for Dubai’s prime market are piled high following the city’s record-breaking 431 $ 10 million+ home sales, including an all-time high of 56 properties trading for over $25 million last year. Despite the record-breaking sales of luxury homes, Dubai ranks towards the bottom end of the most expensive prime markets globally,” Durrani said.
“Indeed, in our global tracker of 15 prime residential markets around the world, $ 1 million secures 979 square feet of residential space in Dubai, three times more than London, New York, or Singapore and about 806 square feet more than first-placed Monaco, where $ 1 million buys around 172 square feet of space. Dubai remains one of the most affordable luxury markets in the world, which only adds to its appeal among the international elite who dominate the upper echelons of the market,” said Durrani.
“Dubai’s residential market is no longer emerging. It has emerged. The nature of buyers in the market is a testament to this shift, as is the type of real estate being developed in the city, much of which would not look out of place in other global cities,” said Will McKintosh, regional partner and head of Prime Residential, Knight Frank Mena.
According to him, Dubai’s unmatched lifestyle offerings coupled with its relative affordability in one of the safest cities in the world have drawn interest from foreign buyers seeking a second home in the emirate. Additionally, residents are settling down and staying longer, which is contributing to the rise of highly sought-after communities situated away from the opulent beachfront mansions. “For instance, we found a balance in Jumeirah Islands, which offered both in terms of tranquil lake views, newly renovated contemporary style homes, and convenient access to local amenities.”
Dubai and Sydney will lead the real estate market in 2024, predicts an analyst at a real estate consultancy that has examined the growth in prime residential capital values in 30 major cities across the globe.
Dubai saw a 17.4% increase in the capital values of its prime residential properties over 2023, with an average growth of 2.2% across 30 cities. In 2024, it is anticipated that the demand for real estate will increase by 4.0% to 5.9%. “Dubai holds numerous factors that generate property demand. It’s the most affordable city for home buyers with average capital values of $850 per square foot. Also, the city’s low cost of living, warm climate, world-class infrastructure, safety and stability, and business-friendly environment make it the preferred choice for investors.”