Dubai’s luxury real estate market has shown resilience in the first quarter of 2023, with sales of high-end properties reaching Dh6 billion ($1.63 billion), reflecting a wider economic recovery.
Wealthy buyers have been purchasing luxury homes in prime neighbourhoods of Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island, which accounted for 64% of luxury home sales. The demand for homes at this price point from local and international ultra-high-net-worth individuals has been driving up prices in this exclusive market segment. Average transaction prices in these high-demand locations have reached Dh8,800 per square foot, a 16% increase from 2022.
Dubai’s property market has been buoyed by its economic recovery from the coronavirus pandemic, higher oil prices, and investor-friendly government policies. The emirate’s economy expanded by 4.6% on an annual basis in the first nine months of 2022, with wholesale and retail trade accounting for 24.1% of its GDP. Emirates NBD estimates Dubai’s full-year 2022 growth at 5%, and expects the emirate’s GDP to grow by 3.5% in 2023.
The up-and-coming areas in Dubai include the Al Wasl-Dubai Canal and Tilal Al Ghaf, which have been rising quickly to prime status. Branded residential sales at the Al Wasl-Dubai Canal corridor are contributing to its emergence as a hotspot for ultra-high-net-worth individuals, while Tilal Al Ghaf is becoming an inland community that delivers on quality and amenities. Knight Frank forecasts that prime residential values in Dubai will rise by 13.5% this year, positioning the city as the fastest-growing residential market for the second consecutive year.
Dubai’s property developers are set to record positive cash flow in 2023 for the fourth consecutive year on the back of healthy pre-sales and favourable payment terms, according to S&P Global Ratings.
With a shortage of prime developments under construction and no slowdown in the relentless ultra-high-net-worth individual demand for luxury second homes in Dubai, the upward trajectory for prime prices is likely to be sustained.