Luxury Segment: Dubai luxury property market to maintain fastest growth rate in H2

The demand for luxury properties in Dubai is expected to remain robust in the second half of 2023, making it the fastest-growing market among major cities globally. This growth is attributed to the continuous influx of millionaires, coupled with a shortage of high-end units in the market. After a notable 11.2% increase in capital value in the January-June period, industry analysts predict another potential up to 10% rise in prices for high-end units during the second half, maintaining the fastest growth rate for the entire year.

Crucially, the upscale real estate sector will not only influence the capital value of mid-range and affordable units but will also contribute to their increase. “With record-breaking sales prices and strong sales absorption, it is anticipated that sales prices will experience consistent growth in the range of 5-10 per cent over the second half of 2023.”

“Although Dubai’s ultra-prime market has historically been notably more affordable than other global cities, the introduction of several uber-prime properties and branded residences, such as Bulgari Lighthouse, Como Residences, Baccarat Residences, and Six Senses Residences, is narrowing the gap,” she remarked.

The Research predicts that prices of prime residential properties in Dubai will experience a growth rate ranging from 6 to 7.9 percent in the second half of 2023. This represents the fastest pace globally, with Singapore and Bangkok following closely. “We predict that Dubai will experience the highest growth for the remainder of 2023, driven by the ongoing relocation of ultra-high net worth individuals.”

“Since December 2020, average prime rents in Dubai have experienced a substantial increase of 62 percent. The city has successfully attracted Ultra-High Net Worth Individuals (UHNWIs) from various countries, and this is notably reflected in the growth of branded residences in the city, a segment that holds particular appeal for an international consumer base,” as stated by analysts.

New launches on the rise

In order to cash on unprecedented demand, founder and chairman of Danube Properties, said more than 15 projects were launched and nearly sold out at launch between June and July.

“It reflects a strong investor appetite, which I believe will persist not only for the remainder of the year but also well into 2024. Despite prices being significantly higher compared to the lows of the Covid-19 pandemic period, they are still reasonable, and in some cases, there is room for further growth. This is also advantageous for property buyers and investors as the increased rental yield compensates for the higher price. Therefore, for a Dh1 million apartment, investors can still expect Dh50,000 – Dh70,000 in rent, translating to a 5-7 percent annual return on investment,” stated Sajan.

Due to strong demand from high net worth individuals, both international and resident buyers, and favorable socio-economic factors, the Dubai ultra-prime and prime market is expected to continue its strength in the second half of 2023. She further emphasized this by noting the successful launch and uptake of many luxury properties across Dubai.

No price ceiling for the luxury segment

The chairman of Danube Properties stated that when it comes to luxury properties, there is no price ceiling, emphasizing that luxury by its nature is without limitations. He noted recent villa sales ranging from Dh100 million to Dh600 million each, indicating the strong demand in the luxury real estate market. He also mentioned that there is still room for growth in the prices of luxury properties, dependent on factors such as location, amenities, and product quality. The market includes one-bedroom apartments priced at Dh1.8 million, appealing to buyers, as well as villas exceeding Dh100 million that are being purchased by ultra-high-net-worth individuals.

Despite a significant increase in prices in the post-pandemic period, the Wealth Report highlighted that prime property prices in Dubai remain 20 to 80 percent cheaper compared to major cities such as Monaco, Hong Kong, New York, London, Geneva, Paris, Beijing, Tokyo, and others.

According to Allsopp & Allsopp, Dubai’s ultra-luxury property segment saw an impressive 176 deals, each exceeding $10 million, surpassing figures from London, Paris, and New York. Buyer registration surged by 84 percent, leading to a 28 percent increase in overall sales, indicating a growing number of new buyers capitalizing on Dubai’s real estate potential.

They expressed excitement about Dubai solidifying its position as the unrivaled global hub for luxury real estate. The market analysis for H1 2023 affirmed Dubai’s status as the preferred destination for ultra-luxury property buyers, and they look forward to the second half of 2023.

Top cities for capital value gains in H1 2023

• Dubai

• Mumbai

• Cape Town

Forecast for top cities for capital value gains in H2 2023

• Dubai

• Singapore

• Bangkok

H2 luxury property market outlook

• 5-10% increase likely in H2 luxury property prices in Dubai: Core

• 6-7.9% luxury property price hike expected in H2 in Dubai: Savills

Some of the new luxury project launched in Dubai:

• Bugatti Residences by Binghatti

• Bulgari Lighthouse

• Como Residences

• Baccarat Residences

• Six Senses Residences