HUGE GROWTH IN DUBAI’S HIGH END
The pandemic drove massive gains in house prices in the city’s premium sector last year, writes Peta Tomlinson
Over the past year, luxury home prices in Dubai have risen faster than the emirate’s billionaires can collect prestige cars.
In the United Arab Emirates’ “City of Gold”, prime property values accelerated by 44 per cent in 2021, the most among 100 cities tracked in Knight Frank’s Prime International Residential Index 100 (PIRI 100). Covid-19 is cited as a significant contributor to this growth.
Kate Everett-Allen, head of international residential research at Knight Frank, says the UAE’s handling of the pandemic and its strong take-up of the vaccine, together with the delivery of high-end turnkey projects as well as innovative new visa initiatives and economic reforms, have boosted Dubai’s profile in the eyes of international buyers.
“The top end of the market has been particularly active – sales above US$10 million have historically accounted for 2 per cent of all transactions, but in 2021, they equated to 7 per cent,” she said.
Because of the pandemic, adds Andrew Cummings, partner and head of prime residential at Knight Frank Middle East, more residents are opting to move into master-planned villa communities that offer open space, good air quality and nature-inspired surroundings.
“Larger villas in prime locations have seen a rise as people are looking for a house with space for a home office, an outside area and private pool,” he said.
In Palm Jumeirah and Emirates Hills – which together make up almost 75 per cent of ultra-prime transactions in the city – villa prices finished the year 16.9 per cent higher than in Q1 2020.
However, Jumeirah Bay Island, a residential community composed of opulent villas and apartments with resort-like amenities, has “gone into overdrive with prices at a staggering 120 per cent above where they were 18 months ago”, Cummings added.
“We expect this upwards trend to go well into 2022 as market conditions are favourable to buyers, sellers and end users,” he said.
Apart from locals upgrading, the prime market is also being driven by a significant wealthy elite either returning to, or relocating to, Dubai.
Paul Tostevin, director of world research at Savills, says prime residential buyers have been flocking to soak up the city’s competitive pricing, quality of life and warm climate.
“Dubai experienced astonishing price growth in the second half of 2021 – levels not seen since before the 2008 financial crash,” he said.
“Although December 2021 capital values were below the market high of December 2014, demand outstripping supply, a successful vaccination programme, opening of international borders and other national government measures have led the city to an impressive performance.”
In a year of global upheaval, Dubai’s golden visa scheme targeting high-income earners – offering 10-year residency for a public investment of at least 10 million dirham (US$2.72 million) – as well as to well-credentialed doctors, specialists, scientists, inventors and so on, seems to have been an incentive.
According to New World Wealth, a research firm that tracks the movements and spending habits of the world’s wealthiest people, Dubai’s population of high-net-worth individuals (HNWIs) rose to 54,000 in June 2021, up by
3.8 per cent from 52,000 in December 2019.
“The number of multimillionaires, or individuals with fortunes worth at least US$10 million, increased to 2,480 from 2,430 over the same period, while the super-rich centi-millionaire population – those with wealth of US$100 million or more – expanded to 165, up by 8.5 per cent,” said Andrew Amoils, head of research at New World Wealth.
The company ranks Dubai as the most popular city with the wealthy in the Middle East and Africa (MEA) region, and the 29th most popular city in the world
(as of June 2021).
Knight Frank’s Cummings agrees that, since Covid-19, ultra-high-net-worth buyers “have descended on Dubai in very large numbers”.
“Dubai’s investments in world-class infrastructure, health and education, coupled with the exceptional lifestyle and amenities from the world’s best restaurants and hotels, have helped transform the city into a destination that people want to own a property in,” he said.
“To add to this, at the top end of the market, quality is now the watchword with developers building super-prime properties to cater to the demands of the global elite, who over the last year have shown themselves eager to own a home in Dubai.”
Ultra-high-net-worth buyers from the Middle East, Europe and North America in particular “have their eyes set on the most exclusive homes in Dubai”, Cummings adds.
“In fact, a new record was set during July with the sale of an uber-luxury mansion on Jumeirah Bay Island for US$32.9 million,” he said.
“Two additional record sales rumoured to be over US$50 million have also been announced, demonstrating that the super-prime market in Dubai is firmly hitting new heights.”
What makes Dubai’s prime property ascendancy in 2021 more remarkable is that it follows seven years of negative price growth. And even with that 44 per cent gain, Faisal Durrani, partner and head of Middle East research at Knight Frank, says overall prices are still 30 per cent below their 2014 peak.
“The relentless demand from the world’s wealthy has fuelled a spectacular turnaround in the fortunes of Dubai’s residential market and, in a sentimentdriven market, this has helped to spectacularly mark the start of the city’s third property cycle,” he said.
“It’s unlikely that the gains of 2021 will be repeated this year, but with such limited prime stock, the top end of the market still has room for growth.”