Dubai: Luxury properties continue to shine in 2023

The luxury property segment in Dubai will continue to climb this year as prices are expected to sustain an upward trend but at a slower pace due to rising demand from high net-worth individuals (HNWIs), tight supply and fewer launches of new developments, experts say.

Analysts, developers and market specialists said the market for luxury homes reigned the segment and is expected to continue to do so in 2023 as well.

Referring to latest statistics, they said that the price of luxury properties witnessed a year-on-year growth of nearly 89 per cent during the third quarter of 2022 and the similar upward trend is expected to continue this year.

A recent report from Knight Frank also predicts that the luxury property market will grow further in 2023 by 13.5 per cent. This is a record in itself, as no other global property market is expected to touch double-digit mark this year.

Fewer new projects

Haider Tuaima, director and head of Real Estate Research at ValuStrat, said there is a handful number of new luxury projects announced last year. And given the current high demand, the luxury segment of the market appears to be undersupplied.

“Currently, there is a limited number of recently listed properties worth over Dh40 million. We estimate this number to be in the region of only 300 villas and 80 apartments, this accounts for both off-plan and ready homes, the majority of which are located in Palm Jumeirah, Emirates Hills, and MBR City,” Tuaima told Khaleej Times.

In reply to a question about the outlook for the Dubai luxury segment in 2023, he said it will sustain an upward trend due to high demand in the market.

“We believe that the rising momentum in Dubai house prices will continue in 2023, particularly for larger, well-located homes, albeit at slower growth rates,” he said.

“Dubai’s real estate market is currently a buyer’s market and is forecasted to continue to be the case in the next six to 12 months, however, some parts of Dubai have already tipped into a seller’s market, particularly properties that have witnessed more than 40 per cent price inflation since mid-2020,” he said.

High demand for prime, ultra-prime properties

David Abood, partner at real estate consultancy Core, echoing the similar views and said Dubai is drawing considerable influx of high net worth individuals’ (HNWIs) wealth evidenced by the sharp rise in high ticket price transactions.

“When comparing year-to-date 2022 values to the same period in 2021, prime segment saw 41 per cent increase in secondary market transactions and 97 per cent rise in off-plan transactions for properties priced Dh10 million and above. Furthermore, 2022 saw the highest ever number of transactions recorded above the Dh100 million mark — total 16 transactions recorded year-to-date 2022 compared to only five transactions in the whole of 2021,” Abood told Khaleej Times recently.

“With strong demand drivers, visa reforms and Dubai’s positioning as global destination and tax haven along with internationally comparable ultra-prime supply catering to this niche audience, we expect demand for the prime and ultra-prime market to continue,” he said.

Why Dubai is attractive

Imran Farooq, chief executive officer of Samana Developers, said the luxury properties will continue to attract HNWIs and wealthy investors to Dubai because of its excellent infrastructure, visa reforms and business-friendly environment.

“Not only millionaires or billionaires but lot of new people are moving to Dubai and the people who left Dubai during Covid-19 pandemic are coming back. Russian-Ukraine crisis has also triggered many families in and around the war zone to move to safe countries such as the UAE while many Europeans are moving to Dubai due to tax-free income,” Farooq told Khaleej Times.

In addition, he said the golden visa and flexible visa regime have been a great help for the market to grow and it looks that Dubai is going to be an undersupply city by 2023.

“2021-22 has been a great year for Dubai’s luxury segment and we are anticipating that we will sustain this growth but at a more moderate rate with softer price increase,” he said.