A recent analysis predicts that by 2023, Dubai’s luxury residential market would dominate international markets and see robust double-digit price growth.
Knight Frank’s 2023 Premier Predictions state that the cost of prime residential locations will increase by 13.5% in 2019. Given that cities like New York, Paris, and Singapore can only record single-digit growth, this is the highest price growth ever recorded.
Luxury properties in the Emirate will continue to be in high demand, and prices are anticipated to end the year around 50% higher than in 2021, according to the Dubai branch of the international real estate consultancy.
Dubai’s position as a refuge of safety
According to partner and head of Middle East Research for Knight Frank, Faisal Durrani, Dubai’s luxury housing market is an anomaly worldwide. Despite starting from a low base, the market saw record prices in 2022.
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 world’s most affordable markets for luxury homes. 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.
The prime residential market in Dubai will keep expanding, according to a previous report by Knight Frank, because of strong investor demand. Dubai’s Palm Jumeirah neighborhood offers the most cheap housing. Compared to Jumeirah Bay Island (Dh5,220psf) and Emirates Hills (Dh3,054psf), it has an average transaction price of Dh3,054 per square foot (psf).
Dubai has a strong market.
The growth of the Dubai super-luxury real estate market hasn’t slowed down in the last year, according to Atik Munshi (Managing Partner, FinExpertiza UAE), and it will continue to grow in the future. Additionally, he anticipates a robust sector 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.
In addition to residential real estate, he claimed that the emirate had drawn and fueled FDI to the nation. According to him, significant investments will eventually trickle down into other sectors of the economy, assisting them as well. To minimize any negative effects, it is crucial to closely monitor inflationary trends.
Chief Executive Officer of Zoom Property is Ata Showery. 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.
Forecasts for 2023
According to Knight Frank, the main residential market in Dubai will experience price increases of 5-7 percent in 2019 and a similar rate in 2023.
According to Durrani, prices in upscale Dubai are anticipated to increase by about 50% from 2021 levels.
He said that supply is yet another crucial element in our outlook for 2023. By 2025, only eight villas are anticipated to be constructed in Dubai’s most prestigious areas.
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 homeowners’ confidence
By 2022, the UAE’s economy will be among those with the fastest growth rates worldwide, according to Durrani. If there is a return to sustained and consistent growth, both investors and homeowners will have increased confidence.
“Our future is not without risk. Due to its global nature, Dubai is susceptible to macroeconomic factors. In line with what it was during the height of the Covid-19 outbreak, he claimed that Dubai has reemerged as a sanctuary of safety.
leading residential markets worldwide
The 25 cities tracked by Knight Frank’s global research network predict a 2% increase in prime property prices. This represents a 2.7% decline from the six-month forecast. The overall growth in 2023 would still be more than it was six years ago, notwithstanding the decline.
Knight Frank asserts that the situation has shifted two years after the epidemic caused a spike in house prices in numerous international cities. Money is becoming more expensive, and the world is losing economic power. For homeowners, the rising cost of living is a key concern.
the unpredictable effects of higher taxes, inflation, and debt. Although they are less susceptible, prime markets are not immune to the effects of rising mortgage rates.
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.