Dubai’s wealthy buyers short of new homes in prime areas

Global high-net-worth individuals are looking to Dubai to invest in property, but with only 289 units due to be completed in prime residential areas by 2026, supply in the emirate’s real estate market is low, driving prices up. 

“We are short of easy-to-activate waterfront development sites – we have run out of coastline,” said Faisal Durrani, partner and head of Middle East research at consultancy Knight Frank, in an exclusive video interview at the unveiling of its inaugural Destination Dubai report.  

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“It probably is an undersupplied market, especially at the luxury, high end,” he added. 

Knight Frank’s report surveyed 183 HNWIs globally, each with a net worth higher than US$3 million, excluding their main home or primary residence. Together, this group owns 851 homes around the world and has a combined net worth of $3.2bn.

The report found that global HNWIs have a combined $2.5 billion to spend on Dubai real estate this year, slightly down on the $3.8 billion spent on homes priced at more than $10 million in the emirate in 2022. 

Yet homes in Dubai’s three ‘prime’ neighbourhoods — Palm Jumeirah, Jumeirah Bay Island and Emirates Hills — are in short supply, with only 289 units expected to be delivered by 2026, according to Knight Frank. As reported by AGBI in December, such communities are mostly built out with few development sites left, while prime beachfront plots are scarce.  

As a result, prime residential prices are forecast to grow by 13.5 percent year on year in 2023 – double the 5-to-7 percent growth rate predicted for mainstream Dubai property, and the fastest growth rate of any prime residential market globally, the report added. 

And supply is not only short in the luxury property segment. On average, Dubai has added between 30,000 to 35,000 homes to the market annually, but Knight Frank estimates that only 24,000 units are due to be delivered each year until 2026. 

This does not mean that Dubai is unaffordable – at least compared with other global metropolises.

“$1 million buys you approximately 1,100 sq ft of space in a prime residential area in Dubai,” Durrani said. “This is three times more than you would get in London, New York or Singapore.

“The cost of living has risen, interest rates have certainly contributed to rising mortgage costs for regular householders, but prices overall remain 15 percent below where they were nine years ago.” 

Watch the full video to find out when the current market growth cycle is going to end