Dubai outperforms global prime residential market in 2022

Dubai outperformed global prime residential markets in 2022 as capital values surged 12.4 per cent compared to 3.2 per cent average capital values across 30 major cities of the world, according to a latest report.

The emirate, which ranked first by Savills in its Prime Residential World Cities Index for 2023, is expected to see steady growth in its capital values this year as the real estate consultancy expects up to 7.9 per cent price increase in the prime areas.

The prime capital values in Dubai hit $730 per square foot and remained one of the most attractive real estate markets in the world.

“The regional hubs of Dubai and Singapore are forecast to top the global price growth charts in 2023. Both cities will continue to see sustained inflows of high net-worth individuals, however they are not immune to higher interest rates and wider economic headwinds,” said Swapnil Pillai, associate director for Middle East Research at Savills.

He said Dubai’s forecast prime price growth of between six per cent and 7.9 per cent is lower compared with the 12.4 per cent growth it recorded in 2022.

“There is still some headroom for growth for Dubai, given its sustained demand levels and lower prime property per sq ft costs compared to other global markets,” Pillai said.

The Savills report indicated that many of the prime residential world city markets are set for a slowdown in 2023 with an average price growth of 0.5 per cent forecast across the 30 global cities monitored by the real estate consultancy in its Prime Residential World Cities Index.

“Of the 30 major global cities tracked, 17 will record slower capital value growth than in 2022. However, 13 cities are expected to register equal or even slightly enhanced growth in 2023,” according to the report.

Highest capital value growth

The report further said Miami and Dubai recorded the highest level of capital value growth in 2022, at 25.4 per cent and 12.4 per cent, respectively, followed by Singapore at 6.8 per cent with price at $1,550 per square foot.

“Whilst lower than the highs of 2021, growth has been fuelled by pent-up demand from both international and domestic buyers, a lack of quality stock and the inflow of high net-worth individuals, companies and family offices,” according to the report.

Cape Town in South Africa and Rome in Italy secured fourth and fifth position with 5.1 per cent and 3.1 per cent capital value growth last year, respectively.

Kuala Lumpur stood firm at sixth position with 2.9 per cent capital value growth last year. The Malaysian capital was the most affordable city in Savills Prime Residential World Cities Index for 2023 with $270 per square foot price in the prime areas.

Hangzhou (China), Madrid and Barcelona (Spain), and Mumbai (India) were the remaining four cities in the top 10 list of Savills Prime Residential World Cities Index.

Oxford Economics has forecast that by 2030 the number of households with an annual income exceeding $250,000 will grow by more than 15 per cent in each of these cities.

In Dubai, the number of these households is also forecast to double, to just under 50,000 households, in the next seven years.

“Capital values rose by an average of 3.2 per cent across the 30 cities we monitor in 2022, with the second half of the year only contributing 0.7 per cent as the deteriorating economic situation and higher interest rate environment took effect,” said Paul Tostevin, head of Savills World Research.

— muzaffarrizvi@khaleejtimes.com