UAE luxury real estate residential market outlook remains bullish

The UAE has established itself as a hub for investors, entrepreneurs and is home to some of the world’s wealthiest people and an increasing number of expatriates. The country’s tax-efficient environment, global connectivity and ease of setting up a business has made it a prime destination to park wealth.

With the country’s GDP on the rise, income generated is distributed among the population, increasing the average per capita income. This increase has translated into a higher standard of living for residents, offering them greater financial resources and purchasing power. The improved economic conditions and higher per capita income in the UAE has acted as significant driver for high-net-worth individuals (HNWIs) seeking attractive investment opportunities and a luxurious lifestyle in the country.

Moreover, factors such as its safe haven status, highly diversified economy, well-established healthcare system, luxury shopping and restaurants on offer, prime residential property market, reputed international schools and all-year round leisure activities have aided the influx of wealthy individuals in setting up their homes, on UAE shores.

The government has also pushed towards establishing itself as a hub for wealthy and potential investors. It has opened up several economic sectors to 100 per cent foreign investment. It has also begun a ‘UAE Residence by Investment’ program, under which qualified individuals are given a 10-year renewable residence permit to retain talent and draw even more wealthy foreign investors. The UAE has recently implemented long-term visas and reduced certain job visas and social norms to improve its international image and attract those who wish to live, work and invest there. In 2022, the UAE attracted more than 5,200 HNWIs, the highest globally.

Following the Covid-19 pandemic, Dubai became the preferred resort for the world’s wealthy, hosting approximately 68,400 millionaires. According to Henley & Partners’ ‘Private Wealth Migration Report 2023’, more than 4,500 millionaires are expected to relocate to the UAE this year.

Most of the HNWIs will relocate to the UAE from India, followed by the UK, Russia, Lebanon, Pakistan and other Asian and African countries. The UAE is home to around 109,900 millionaires with $1 million-plus wealth, 298 centi-millionaires with $100 million-plus assets and 20 billionaires.

The influx of HNWIs in the UAE has stimulated demand for the already thriving real estate market, especially for luxurious properties in Dubai that offer exclusive amenities. These discerning investors seek upscale residential properties, including high-rise penthouses, luxury villas, and waterfront mansions, among others.

The UAE’s real estate market has responded to this rise in demand by providing a wide array of prestigious projects with developers focusing on state-of-the-art infrastructure, often incorporating exclusive services and features such as private beach access, yacht berths, and personalized concierge services to cater to the expectations and preferences of HNWIs. Notably, Dubai has been ranked as the world’s fourth-most active market in the luxury residential segment as sales of prime properties continue to rise.

According to Knight Frank, Dubai witnessed a total of 92 deals worth $1.7 billion in first quarter of 2023 for homes valued at $10 million or more. By comparison, Hong Kong had 67 transactions valued at $988 million, while New York raised $942 million in 58 deals, and London completed 36 sales worth $736 million.

HNWIs plan to spend $2.5 billion on Dubai property this year, with around 22 per cent prepared to commit $5 million to $10 million on real estate in the Emirate and eight per cent ready to spend more than $80 million. The report also states that East Asian buyers have a higher spending propensity, with many prepared to allocate more than $20 million to buy property in Dubai.

In 2022, approximately $3.8 billion was spent on homes in Dubai, priced at more than $10 million. Expanding their property portfolio, especially in high-end villas and apartments, has emerged as the primary reason to invest in Dubai for those with a net worth of more than $10 million. There is also a shift in preference from off-plan purchases to recently built or completed homes.

The UAE real estate market has continued to recover from the pandemic due to government initiatives, higher oil prices and other measures to support the economy. In first quarter of 2023, the average prices for homes above $10 million reached approximately $1,970 per sqft, translating to a 16 per cent y-o-y increase from $1,700 per sqft in 2022.

The writer is a Dubai-based financier and an entrepreneur. Views expressed are his own and do not reflect the newspaper’s policy.