Demand grows for a life of luxury in Dubai

Reuters/Abdel Hadi Ramahi

Dubai’s prime residential real estate sector enjoyed a 55 percent year-on-year increase in demand in the first quarter, as a lack of supply has spurred the market for luxury homes.

The emirate recorded 88 sales of units valued over $10 million in Q1, while average transactions stood at AED3,360 ($915) per square foot, according to Faisal Durrani, head of Middle East research at Knight Frank.

“The city remains one of the world’s most affordable luxury home markets,” he said.

• Emaar’s profit rises 43% as property sales hit $2.5bn
• Abu Dhabi to spend $23bn on new neighbourhoods

Dubai was positioned at the top of Knight Frank’s Prime Global Cities index, which was released this week, with 44 percent annual growth in prices.

This was ahead of other major cities including Miami, Singapore, Paris and London.

Chris Boswell, a real estate agent in Dubai, said he has closed over AED230 million worth of sales so far this year and described demand in areas including Palm Jumeirah, Jumeirah Bay Island and Dubai Hills as “extreme”.

“I see no evidence of a peak or the market slowing down in the short term,” Boswell said.

Average prices across Dubai’s residential real estate market increased by 14.5 percent from January to April. Average apartment prices increased by 14.5 percent and average villa prices were up 14.9 percent, according to the latest report from CBRE. 

“Prices will continue to go up because there is a lack of supply or available supply,” said Taimur Khan, head of research at CBRE.

While average apartment sales rates across Dubai still sit at 15.6 percent below the record levels registered in late 2014, several neighbourhoods have already topped this. Average villa sales rates are 2.7 percent above their 2014 peak.

“We expect a period of stabilisation by the end of the year, with prices potentially plateauing, however, we don’t expect a slowdown in the near term,” said Edward Macura, co-CEO of Core Real Estate.