Dubai is the most anticipated 25-city destination for 2023, with a 13.5 percent price rise. According to Knight Frank’s report, prices are expected to rise on average by 2 percent in all 25 cities.
The second and third spots are held by Los Angeles and Miami, respectively, after Dubai. However, the forecast rate has fallen in the last six months due to stronger recessionary concerns. Fixed mortgage rates in the US have exceeded 7 percent. A mansion tax in Los Angeles is being considered for homes valued above $5 million.
The Dubai prime markets, which include the areas of Palm Jumeirah and Emirates Hills, are booming with a 29 percent growth rate in the third quarter of 2022.
The report states that price increases can be attributed to a lack of supply and strong inflows from ultra-high-net-worth individuals (UHNWI), who are looking for second homes in Dubai.
Dubai is one of the most sought-after cities for purchasing a home. It ranks third among the top three most desirable cities. This city is also popular with HNWIs who are based on the Chinese mainland.
Palm Jumeriah’s price prime growth has exceeded 100 percent since the outbreak of the pandemic. Meanwhile, prime residential prices in Dubai’s top areas have increased by 89 percent in the past year. According to the report, Dubai is one of the most affordable luxury residential markets worldwide.
In 2022, ultra-prime properties and homes valued over $10 million saw a record year. In the first nine months, 152 ultra-prime transactions were made. Palm Jumeirah is still the most affordable when it comes to average transacted prices, compared with Emirates Hills or Jumeirah Bay Island.
Despite high demand, developers aren’t delivering new projects at the rapid rate that was previously observed.
The report shows that the greatest challenge facing the Emirate is the lack of waterfront homes. However, the demand for waterfront property is increasing.
Cash purchases are also on the rise, accounting for more than 80 percent of total transaction values. With cash purchases dominating Dubai’s luxury residential market, it is unlikely that demand will decrease.
However, the report highlighted potential risks Dubai may face because it is a global city and therefore vulnerable to macroeconomic conditions.
Due to growing economic uncertainty worldwide, Dubai is becoming a haven.
The US dollar has been strengthening in the past six months. Dubai’s fixed peg may affect its relative affordability to buyers from the UK and EU.