Dubai is one of the most ‘affordable’ luxury residential markets in the world. The Palm Jumeirah, one of Dubai’s most exclusive addresses has registered prime price growth in excess of 100% since the start of the pandemic. Prime residential prices across Dubai’s top neighbouhoods increased 89% in the last 12 months but prices are rising from a low base. A recently published report by Knight Frank titled, ‘Dubai Residential Market Review Winter 2022-23’ shows that the average transacted prices stand at AED 3,220 per square feet (psf), or around US$ 870 psf, making Dubai one of the most ‘affordable’ luxury residential markets in the world. In Indian Rupees, one AED – United Arab Emirates Dirham is equal to about Rs 22.50.
The strongest performing submarkets remain the city’s most expensive neighbourhoods. Villas on the Palm Jumeirah continue to experience the sharpest price rises, with average transacted prices breaching the AED 3,500 psf mark, rising by 6.9% during Q3, leaving them 48.2% higher than this time last year.
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This also means that average villa prices on the Palm Jumeirah have risen by 79.8% since the start of the pandemic in January 2020 and now stand 26% above their 2017 peak levels. As has been the case since the start of the pandemic, villa submarkets across Dubai have experienced strong price growth. Mohammed Bin Rashid City has been the next best performing neighbourhood, with values increasing by 26.1% in the last 12 months to AED 1,160 psf.
The strength of villa price growth is being underpin by domestic buyers’ desire for more space, combined with the all-important international buyer cohort, in particular, overseas-based ultra-high-net-worth-individual’s (UHNWI).
Like villas, apartments in the city’s premier districts have experienced the strongest uplifts in value during Q3, with MBR City (10.3%) and the Palm Jumeirah (8.2%) emerging as the first and second strongest performers, respectively. At about AED 1,600 psf, apartments at Dubai Hills Estate (19%) have seen the highest price growth in the last 12 months.
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Zooming in to Dubai’s prime markets, which encompass the neighbourhoods of the Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island, reveals even stronger price growth than the mainstream villa market. Prime values continue to strengthen, growing by 29% in Q3 2022 alone.
A shortage of new supply and strong inflows of UHNWI who are targeting second homes in Dubai’s premier districts are behind the price rises. This trend marks a significant departure to the emirate’s two previous market cycles, where the overriding flavour of buyers was linked to buy-to-let or speculative purchases.