The surge in Demand for Luxury Properties in Dubai
The surge in Demand for Luxury Properties in Dubai
What is happening right now in the premium segment of the real estate market in Dubai? What are the latest trends, and developments, and can the market sustain the high demand with the existing supply? These are some valid questions that, I am sure some of you have pondered on, whether you plan on buying your next luxury home in Dubai, or simply prospecting.
The article below aims to offer some guidelines and keep the reader in the loop about the market direction for the last quarter of 2022, and what the forecast predicts for next year.
Bright Future for Luxury Properties in Dubai
Since early 2021, we have seen a progressive demand for premium properties, which is likely to continue throughout this year and 2023. Overall, Dubai real estate market is expected to thrive even further due to the demand from international buyers and end-users. Market experts took to social media platforms to share statistics and reports that predict a market increase and high demand for premium residential properties.
Accordingly, this can only mean one thing: real estate brokerage companies that focus on this market segment – such as Realty Force Real Estate, are fully equipped to capitalize on the demand for luxury properties if they have the inventory. But now, more than ever, the stock is limited, due to the high interest coming from millionaires and entrepreneurs ready to relocate or buy a luxury home in Dubai. The market might soon find itself unable to cater to the demand of Russian, European, and American buyers looking for premium homes in Dubai. After all, it is the HNWIs – high net worth individuals – who boost the growth of the luxury market.
Demand for Premium Homes in Dubai
As a result of the high inflation numbers in Europe after the Russian-Ukrainian war broke out, approximately 4,000 HNWIs – high net worth individuals – are expected to hit the UAE shores. The super-rich show interest in buying high-value properties in Dubai, for several reasons. Owning a super-prime property in Dubai comes with the guarantee of high returns on their investments. Secondly, Dubai has always been attractive to the elite. The emirate had a massive impact globally with the hosting of Expo 2020 which proved to be a major success. Furthermore, UAE demonstrated impeccable crisis management during the pandemic. The Government and the entire health system were fully prepared to handle Covid19, through proper leadership and a proactive approach.
The tax-free regime in UAE and 100 percent foreign ownership of companies and residential property are other strong incentives attracting high-profile investors to Dubai. Ultimately, the visa reforms that the UAE introduced last year will grant many benefits and residency for expats and their families in the country. For example, those who are interested in securing residency in Dubai can apply for a five-year Green Visa, or a 10-year Golden Visa, among others. So far, the most popular proved to be the 3-year and 5-year investor visa which is granted to residents who buy property in Dubai with a value higher than 2 million Dirham or more.
Luxury Market recorded the highest value transactions
The rising demand from foreign investors is reflected in the sales volume for the prime residential sector, with figures showing that 2021 recorded the highest secondary market deals in the last ten years. The transactions took place against properties exceeding 10 million Dirham in value, and Palm Jumeirah accounted for 35% of these transactions. Subsequently, the sales trend for properties above AED 10 million continued in 2022, reaching 140.2% higher than the same time last year. During January-March this year alone, 483 transactions above AED 10 million were recorded, and 305 villas were sold in Q1 2022, compared to half the amount in 2021.
The prime real estate market is expected to double its value in the coming months, with prices already on the increase, due to the demand for the luxury segment. The influx of investors coming to Dubai to buy premium beachfront properties and luxury penthouses has increased as well, compared to December 2020. This is because the luxury segment of Dubai real estate is still relatively cheaper compared to other worldwide cities.
Top areas in Dubai favored by the super-rich
Palm Jumeirah remains more popular than ever, with a surge in sales volume for the prime residential segment in this area. The elite are choosing to invest in luxury homes in Palm Jumeirah, with two-thirds of sales in the prime sector recorded in May alone. To be more precise, there were over 35 transactions for homes valued at over AED 20 million taking place on the popular man-made island.
District One is still number one for affluent buyers looking for premium villas and the ultimate luxurious, urban living experience.
As recently as May this year, Realty Force Real Estate, represented by CEO Mr. Riyaz Merchant transacted one of the most expensive sales in District One, with a value of AED 89.1 million. The 8 Bedroom mansion sale was one of the largest, most expensive properties to be sold on the crystal lagoon with a land area of 31,800 sq. ft. and a Built-Up Area of 32,500 sq. ft. Adding even more extravagance to the lagoon-facing mansion are eight lavish bedrooms, ten bathrooms, six-car park slots, a cinema room, a private gym area, a private pool, an entertainment zone, and a massive family lounge.
Tight supply for Premium Real Estate
The recent high sales volume in the secondary market is quickly absorbing the ready stock for the luxury segment. Lack of inventory is now pushing the HNWIs – high net worth individuals – to shift to the off-plan and explore premium options in the primary market. As a result, we have seen new launches and developments by niche developers, generating high interest. High volume transactions for new launches such as Six Senses by Select Group or W Residences by Al Sharq are strongly reflecting the off plan trend.
These high-end projects offer supreme quality, exclusivity and privacy, followed by bespoke design and state-of-the-art amenities. Above all, the location ticks all the boxes, because when buying ultra-premium homes, you actually buy a lifestyle. The supply is limited and there is strong demand coming from the influx of elite investors moving to the region. Therefore, we can expect that the upcoming months will produce even better figures for premium sales in Dubai real estate.
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