Dubai’s prime residential market is poised to experience exceptional growth in the coming year, making it one of the most affordable luxury real estate markets worldwide. According to a recent report by Knight Frank, Dubai’s prime residential areas are projected to see double-digit price increases, surpassing global markets in terms of growth by 2023.
Rapid Price Increases and Market Leadership:
Knight Frank’s 2023 Prime Predictions reveal that Dubai’s prime residential market is anticipated to witness a significant 13.5 percent price surge next year. This growth rate outpaces other major cities such as New York, Paris, and Singapore, which can only achieve single-digit growth. The report also states that luxury properties in Dubai continue to be highly sought-after, with prices expected to finish the year nearly 50 percent higher than in 2021.
Dubai’s Safe-Haven Status:
Faisal Durrani, Partner and Head of Middle East Research at Knight Frank, notes that Dubai’s prime residential market is an exception on a global scale. Despite starting from a low base, the market achieved record prices in 2022. Durrani attributes this success to Dubai’s status as a safe haven, the diverse international ultra-high-net-worth individuals seeking luxury second homes, and the government’s effective response to the pandemic. These factors have fueled the growth of prime property values in the city.
Affordability and Resilience:
Dubai’s real estate market stands out as one of the most affordable luxury residential markets worldwide, with prime homes selling for as low as $800 per square foot. This affordability factor adds to the appeal of investing in Dubai. Although overall residential prices are 21.4 percent lower than their peak levels in 2014, Knight Frank’s earlier report suggests that Dubai’s prime residential market will continue to grow due to strong investor demand.
Atik Munshi, Managing Partner at FinExpertiza UAE, confirms the sustained growth of Dubai’s super-luxury real estate segment, projecting its strength to continue into 2023. Munshi highlights Dubai’s handling of the COVID-19 situation, the city’s reputation as a safe destination for ultra-high-net-worth individuals, low tax rates, long-term visas, and minimal bureaucracy as factors that have attracted significant foreign direct investment (FDI) beyond residential real estate. He emphasizes the positive impact of these investments on other sectors of the economy, while urging close monitoring of inflationary trends to mitigate any adverse effects.
Future Outlook and Positive Impact:
According to Ata Showery, CEO of Zoom Property, Dubai’s prime residential market has long been attractive to high-net-worth individuals and foreign investors. Following a strong performance in 2022, Showery predicts that the market will reach its peak in 2023, with substantial growth benefiting not only the real estate industry but also the overall economy.
Knight Frank’s predictions for 2023 indicate price increases of 5-7 percent in Dubai’s main residential market, maintaining the upward trajectory seen in recent years. Durrani suggests that prime property prices in Dubai are expected to be around 50 percent higher than in 2021. The report also highlights limited supply in Dubai’s prime precincts, with only eight villas expected to be built by 2025. This supply-demand imbalance, coupled with a positive economic backdrop, supports Knight Frank’s forecast of 13.5 percent growth in the prime residential market for 2023.
Building Confidence in Investors and Homeowners:
Durrani believes that the UAE will become one of the world’s fastest-growing economies by 2022, fostering increased confidence among investors and homeowners.
