Luxury residential real estate is one of the main factors of Dubai's popularity among wealthy foreign buyers. The key areas of the emirate representing the largest list of options for purchase are Palm Jumeirah, Emirates Hills and Jumeirah Bay. These areas are responsible for the lion's share of all sales of premium housing in the city and they have demonstrated the most impressive price growth in this market segment over the past year — 88.8%.
However, despite the fact that the growth rates remain in the same direction with the indicators of previous years, the nature of sales is strikingly different from the previous market cycle, which were associated with a wide demand for the purchase of luxury properties for investment practices «buy-to-let» and «buy-to-flip» (for the purpose of renting out and buy for resale). Today, luxury real estate is considered as a consumer item or a «piggy bank» for the colossal savings of extremely wealthy foreigners from Europe, Russia and Ukraine, India and China.
Attention is also paid to the fact that the elitism and high cost of the three leading districts of Dubai is not equivalent. Palm Jumeirah, despite its abundant presence in the media sphere, is actually the most affordable of the three most elite. The artificial island shows an average price tag per square meter of housing in the region of $9,000. For comparison, Emirates Hills and Jumeirah Bay Island have grown over the past year to $15,000 and $18,500 per square meter.
Such prices and the indicated growth rates are a consequence of an unprecedented increase in the influx of foreign buyers in the last six months. The beginning was laid by the mass migration of super-rich Russian and Ukrainian citizens, subsequently supplemented by European buyers from Germany, Great Britain, France. The resort lifestyle, abundance of luxury, a lot of super expensive assets, well performing the role of a «quiet bay» for savings brought Dubai to the world leaders among real estate markets.
However, this overlapped with the trends of the previous year, 2021, which was distinguished by the situation of the «rally for villas», when investors fleeing from the pandemic bought villas, mansions, ultra-expensive apartments and premium townhouses on an unprecedented scale, moving the entire market up. By October 2022, such movements led to an impressive shortage of goods for sale in the elite segment.
If earlier the construction sector and the Dubai real estate market worked on the principle of «build, and buyers will appear», which led to a chronic oversupply of housing for sale, today many wealthy buyers literally have nothing to buy. The oversupply in the market persists, but not in those sectors in which supply is needed the most.
To illustrate, it is worth giving plans for bringing new real estate to the market by 2025. At the moment, there are plans to put about 81,000 new real estate objects on the market. However, only 8 of them are premium — all of them are located in Jumeirah Island Bay. As a result of supply shortages, inflation, rising construction and energy prices, the cost of premium housing increased by 29% in the third quarter of this year alone. In total, 152 ultra-luxury properties were sold in the emirate in a year.
This gives buyers two choices: to enter the market for purchases right now, entering into competition with other buyers, or to look for new, undeveloped areas of the city. In the second case, there are options to choose from. Already today, several plans are known to restart and revitalize the Palm Jebel Ali artificial island project, the Deira Islands archipelago, many investors are casting their eyes at The World archipelago. At the same time, the areas of Expo-2020 — Expo City Dubai were rediscovered, and many developers, observing the growth of widespread demand for the suburbs of the city, plan to develop new areas deeper into the peninsula.
While market experts do not predict a decline in demand for the elite segment in the coming months, it is recommended for many to pay attention to various latest urban development projects of the emirate.
