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According to global real estate advisory firm Knight Frank, ultra-high net worth individuals are set to spend $2.5 billion on real estate in Dubai in 2023. Last year, $3.8 billion was spent on homes worth more than $10 million in the emirate.
It includes the “Destination Dubai” report, the first of its kind prepared by the “Knight Frank” company, which was built on a survey of 183 wealthy people in the world, with a net worth of more than $ 3 million, without counting their main places of residence. This group owns 851 homes around the world, and has a combined net worth of $3.2 billion.
Luxury homes in Dubai are increasingly being targeted by the world’s wealthy, which are primarily located in the most desirable areas of the city. The report highlights Downtown (37%) and Palm Jumeirah (30%) as the best areas among the respondents. Specifically, for High Net Worth Individuals (HNWI) from the UK, Europe and North America, Palm Jumeirah (15%) and Emirates Hills (16%) emerge as the preferred locations to buy residential units. As for investors from East Asia, Downtown is preferred (53%), followed by Business Bay and Business Bay (32%).
turning point
Faisal Durrani, Partner and Head of Middle East Research, explained: “With a history spanning only 23 years, identifying signs of maturity in Dubai’s residential real estate market is a challenge. With the rise in ready unit purchases, particularly in locations such as Palm Jumeirah, the global elite are paying record prices for beachfront villas. After that, they spend a similar amount to redesign and renovate these homes, which indicates that they will come out of the normal cycle of selling homes in the market for a while, and this reflects what we see in well-known markets such as London. In fact, 71% of our respondents with a net worth of more than $10 million intend to redesign and renovate their residential purchase in Dubai.”
emerging neighborhoods
The overwhelming demand from both local and international Ultra High Net Worth (UHNWI) has boosted the prices of luxury homes. In the first quarter of 2023, the average price of homes over $10 million was AED 7,235 per square foot, up 16% from AED 6,250 per square foot in 2022. Luxury residential areas such as Palm Jumeirah, Emirates Hills and Jumeirah Bay Island continue to lead sales. luxury real estate; The average price was AED 8,800 per square foot in the first quarter.
These luxury neighborhoods account for 64% of first quarter sales of homes valued at more than $10 million, with emerging areas such as Al Wasl Corridor – Dubai Canal and Tilal Al Ghaf emerging as future ‘luxury’ locations. With many high-value transactions recorded, these areas are gradually positioned as centers of attraction for the ultra-high-net-worth individuals in Dubai’s real estate market.
global interest
Dubai city’s successful response to the COVID-19 pandemic and strategic economic measures have been recognized as key drivers behind the remarkable 112% growth in luxury residential property values since January 2020. In the current real estate cycle in Dubai, the luxury apartments sector, particularly Palm Jumeirah and Downtown, have witnessed growth rates. by 25% and 15%, respectively, since the first quarter of 2022. On the other hand, villa prices have increased evenly thanks to local demand and an increase in the number of ultra-high-net-worth villa buyers. However, Palm Jumeirah villas lead the list of price growth in the city with an increase of 126% since January 2020.
preference for flats
Despite the popularity of the villa lifestyle in Dubai, the report found that apartments are the most popular type of residential property among high net worth individuals; Where it is preferred by 64%. However, among those with a net worth of more than $10 million, 53% would prefer to buy a villa in Dubai.
Market definition
The report follows a unique approach to identify the main neighborhoods in the city of Dubai, which are characterized by the presence of five luxurious neighborhoods. Drawing on data from more than 600,000 residential real estate transactions in the past 23 years, the report identifies Palm Jumeirah, Emirates Hills and Jumeirah Bay Island as the prime luxury neighbourhoods. These results represent an important development in the real estate sector in Dubai.
Tilal Al Ghaf quickly joined Dubai’s growing list of ultra-luxurious districts; Where three homes were sold worth more than 90 million dirhams last year, and seven villa deals worth more than 10 million dollars were concluded in the first quarter of this year, indicating that Tilal Al Ghaf will soon fulfill our definition of a luxury neighborhood.
investment potential
The factors driving home ownership in the city are varied. However, the desire to expand the real estate portfolio is a major reason for people with a net worth of more than $10 million. A significant portion of the people who have never visited Dubai have expressed interest in using their real estate properties as a second home or for investment purposes.
investment strength
The report reveals that respondents have allocated a whopping $2.5 billion to buy real estate in Dubai this year. Remarkably, 22% of them are willing to invest $5-10 million, while 8% are willing to spend more than $80 million.
major investors
According to our survey, there is a strong demand for second homes and investment properties in Dubai among high net worth individuals. “Investment/capital returns” and “second home/vacation home” emerged as the most important motivators for this demographic. Individuals whose net worth is more than $10 million mainly aim to “expand the portfolio.”
The total budget for real estate purchases in Dubai this year among the participants is $2.5 billion, with a large part willing to spend in excess of $5m.
