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Mansoor Ahmed, Executive Director and Head of Development Solutions, Healthcare, Education and PPP, Colliers in MENA and Mariam Mahmooth, Senior Director of Development Solutions, Colliers in MENA, take a look at the trends in the luxury real estate market of Dubai
March 22, 2024 | Mansoor Ahmed and Mariam Mahmooth | UAE | Developers
Dubai continues to dominate the global luxury property market, surpassing other international realty hotspots, with 2024 poised to sustain this trend. The city's appeal to high-net-worth individuals (HNWIs) is evidenced by a surge in home sales exceeding $10 million. In 2023 alone, Dubai witnessed a substantial 59% increase in such transactions, totalling 421 sales compared to 264 sales in 2022. This surge translated into a total sales value of $8.1 billion, marking a 38% growth from the previous year's $5.9 billion. The year 2024 has commenced on a promising note, with 61 transactions valued at $1.05 billion already recorded, signalling a healthy trajectory for the luxury real estate market.
Key areas across Dubai, including Palm Jumeirah, Jumeirah Bay Islands, Umm Suqeim, Dubai Marina, and Blue Waters, boast over 60 luxury projects, offering unit prices exceeding $10 million. These developments redefine upscale living with an array of typologies, encompassing villas and apartments, accompanied by state-of-the-art amenities that transcend the ordinary.
Noteworthy is the emergence of new high-end residential catchments inland, underscoring a strategic shift away from the coastal belt. Areas such as Dubai Hills, Arabian Ranches, Al Barari, Tilal Al Ghaf, Jumeirah Golf Estates, and Emirates Hills are being identified and planned to cater to the premium market. Sustainability takes centrestage in these developments, with a focus on energy efficiency and green spaces, enhancing their appeal to HNWIs worldwide.
The top buyers in Dubai's prime market hailed from the UK, China, UAE, and India. These buyers are attracted to Dubai for its cosmopolitan lifestyle, favorable tax environment, high-quality infrastructure, and luxury amenities and attractions. Additionally, Dubai's strategic location as a global business hub and its reputation for luxury living contribute to its appeal among wealthy individuals seeking high-end properties.
According to Colliers’ research, the residential stock for high-end properties has surpassed 9,000 units, with apartments constituting 75% of the total supply. Palm Jumeirah leads in existing residential stock, accounting for 41% of total units, followed by Dubai Marina (18%), Downtown Dubai (10%), and Bluewater Island (8%).
Looking ahead, approximately 5,000 units within the premium category are projected to enter the market between 2024 and 2028, with apartments comprising 90% of the upcoming supply. Palm Jumeirah is anticipated to witness the highest concentration of new offerings, representing 36% of the total pipeline.
Historically, the premium stock typology is almost evenly split, with villa transactions constituting 52% of the total in 2022. Within the villa segment, larger units with more than 5 bedrooms garnered the highest demand, comprising over 80% of total villa transactions.
In 2022, Palm Jumeirah witnessed the highest number of villa transactions (33%) within the target group, which accounts for a total 132 sale transactions, with a transaction value of $2.55 billion. This represents a 51% increase compared to 2021. Notably, over 200 villa transactions have been recorded in 2023.
Analysing villa transactions; the unit size ranged between 340 and 3,560 square meters per unit depending on the number of bedrooms and overall villa offerings and features and the sales rate averaged around $18,800 per square meters. Similarly, apartment transactions experienced a significant increase, with Palm Jumeirah accounting for 70% of total transactions in 2022. The average sales rate for apartments stood at $18,000 per square meter, with the highest transaction amounting to $45 million for a 5-bedroom unit.
In conclusion, Dubai's luxury real estate market continues to flourish, driven by innovative developments and sustained interest from HNWIs worldwide. With a strategic emphasis on sustainability and upscale living, Dubai remains a premier destination for luxury property investment.
