According to forecasts of the international consulting company Knight Frank, the Dubai luxury housing market in 2023 will record the highest growth rates among all elite markets in the world – up to 13.5%. Much of this is due to the imbalance of supply and demand and positive economic growth.
The main demand is fueled by Dubai's status as a safe haven, an exceptionally diverse range of international investors and end-buyers with ultra-high wealth looking for luxury second homes. A significant role in increasing demand and growing loyalty to the city was played by the government, thanks to the rapid fight against covid and its consequences, as well as competent initiatives regarding foreign business.
The attractiveness of the city is added by its relative "affordability" of prices: luxury properties are sold for about $800 per square meter, which makes Dubai one of the most affordable luxury housing markets in the world.
It is expected that the limited supply of new real estate will also support the growth of the luxury real estate market in the emirate.
Market statistics from the beginning of 2023
Against the backdrop of an extensive economic recovery, sales of real estate from the premium segment increased and reached 6 billion AED ($1.63 billion) in Q1 2023. Wealthy buyers have purchased 88 residential units of premium properties worth more than $10 million.
About 64% of luxury real estate sales in the first 3 months of 2023 fell on the key markets of the emirate:
- Palm Jumeirah
- Emirates Hills
- Jumeirah Bay Island
As luxury real estate sales continue to grow, Dubai ranks fourth in the world in terms of activity in the luxury residential real estate market.
According to the Knight Frank report, the average transaction prices in these communities reached 8,800 AED per square meter.
"Sustained high demand for luxury properties from the international elite has largely contributed to the growth of average prices for villas in Dubai – by about 44% since January 2020," said Andrew Cummings, partner and head of luxury real estate at Knight Frank.
This level of growth allowed villa prices to reach the last market peak in 2014, demonstrating the transformation of Dubai into the world's leading luxury center.
The biggest deals of 2023
In April, a sandy plot in Jumeirah Bay with an area of 24,500 square meters was sold. The transaction amount was 125 million AED, which makes it the most expensive land sold in the UAE. The transaction value surpassed the previous record of 91 million AED.
A luxury mansion on Lanai Island in Talal Al Ghaf was sold for 200 million AED amid increased demand for luxury real estate in Dubai.
Rising real estate prices
According to the latest report, real estate prices in Dubai jumped by 13% year-on-year in Q1 2023, driven by high demand for ready-made homes in the luxury segment. On a quarterly basis, prices rose by 5.6%, which was the ninth consecutive quarter of growth.
Prices for villas increased by 15% year-on-year and reached 1,450 AED per square meter, while apartments rose by 12% to 1,230 AED per square meter. On a quarterly basis, prices for villas and apartments increased by 5.1% and 5.7%, respectively.
Over the past 12 months, Dubai Hills Estate has recorded a 26% increase in apartment prices, which makes it one of the most profitable in the city.
According to Knight Frank, Palm Jumeirah was the most dynamic villa market in the city, with prices rising by 14% quarterly over a three-month period and by 53% over the past 12 months.