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As per a report by Savills, the emirate’s real estate market is competitively priced by global standards, at $850 per square
February 19, 2024 | Staff Reporter | UAE | Developers
Dubai continues to be the hottest prime residential property market, with capital values increasing 17.4% for the year, with a more modest 5.6% recorded in the second half. This performance is recorded against an average price growth of 2.2% across 30 global cities covered in the Savills Prime Residential World Cities Index.
The (Dubai) market is still relatively competitively priced by global standards, at $850 per square foot, offers a comparatively low cost of living, a relatively easy visa process, and a warmer climate, which continues to attract international and domestic buyers, Savills researchers said in the report.
Other Asia Pacific cities led capital values growth in 2023, with Mumbai leading the pack. Meanwhile, some cities felt global economic turbulence more than others, particularly in the second half of 2023. New York and San Francisco, with the former seeing a muted return to office and the latter still weathering tech-turbulence, recorded some declines for the full year. Hong Kong’s ongoing political and economic uncertainty continued to hamper its prime residential markets, with capital values falling 3.7% over the year.
Looking ahead into 2024, capital values for global cities will remain in positive territory, Savills says. Prime residential price growth of a modest 0.6% is forecast across the 30 global cities monitored by Savills, down from the 2.2% achieved in 2023.
In the face of ongoing economic uncertainty and a higher interest rate environment, prime residential markets in world cities were muted in 2023 following two years of significant gains. Growth is forecast to slow further in 2024 as markets return to more normal conditions, but will broadly remain in positive territory.
Kelcie Sellers, Associate, Savills World Research
Sydney and Dubai’ are forecast to be the two top performers for the year ahead, with both cities set to benefit from increases in their high-net-worth populations. Sydney’s property market is seeing high levels of demand for quality prime homes, but supply remains low. It’s likely that this imbalance will persist through 2024 and push up prices, which are forecast to increase by 8%-9.9%.
Andrew Cummings, Head of Residential Agency at Savills Middle East commented, “Dubai's continued success owes much to the continuing maturity of the city. With world-class infrastructure alongside safety and security, Dubai is rapidly cementing its status as the number one lifestyle destination. An undersupply of ready property, combined with the development of new high-quality developments, is leading to increased pricing. The diverse nature of Dubai buyers means that demand continues to be robust. Meanwhile, further government visa reforms, including reducing the spending requirements to secure a ten-year golden visa, have further boosted demand in the sector.”
Suffering from weaker sentiment associated with higher interest rates and the challenging economic backdrop, the prime residential markets of Los Angeles, New York, San Francisco, Seoul, London, Singapore, and Hong Kong are all forecast to see price falls this year.
Sellers said, “We expect it to be a year to watch the markets globally. Countries which account for approximately 40% of the global population will go to the polls this year, and housing will likely be front of mind for many voters and policymakers alike. The potential for central banks to also cut interest rate during mid to late 2024 may also boost activity across prime property markets and could surprise on the upside for pricing in the latter part of the year.”
Dubai also recorded rental price increases during the year at a little under 10%, versus the average 5.1% recorded among other global cities in the Savills index.
Lisbon led prime rental growth among the 30 cities in the index, increasing 39% last year.
