RIYADH: Prime residential market values in Dubai have risen by 88.8 percent over the last 12 months according to a report released by Global Real Estate Consultants Knight Frank.
The report, which analyzed the prime residential market areas Palm Jumeirah, Emirates Hills and Jumeirah Bay Island, found the 29 percent growth of prime residential values in the city during the third quarter was driven by the rise of ultra-high-net-worth individuals in search of a second home in Dubai.
“This insatiable demand has fueled villa price rises of over 100 percent in locations such as Palm Jumeirah since the start of the pandemic. Elsewhere, ultra-Prime homes sales, i.e., homes priced at over $10 million have also hit a fresh high,” said Faisal Durrani, partner and head of Middle East research at Knight Frank.
“The first nine months of the year have registered 152 ultra-Prime sales, eclipsing last year’s all-time high of 93. And in fact, 93 of these deals have taken place in Q3 alone,” Durrani added.
Knight Frank's analysis showed that the most affordable among the three prime residential districts surveyed is Palm Jumeirah where the average transacted price amounted to 3,054 dirhams ($870) per square feet, while it stood at 5,200 dirhams and 6,345 dirhams per square feet in Emirates Hills and Jumeirah Bay Island respectively.
“At around AED 3,200 per square foot, or about $870 per square foot, Dubai’s prime residential neighborhoods remain among the most affordable in the world. This, combined with the high quality of residential product now available in the upper echelons of the market, is cementing Dubai’s position as one of the world’s leading second homes markets,” said Andrew Cummings, Knight Frank’s head of prime residential.
Dubai’s perennial challenge has been its ‘build-it-and-they-will-come’ strategy, which has resulted in more homes being built than the market is capable of absorbing. In this cycle, however, the number of new houses planned has failed to meet the rising demands, Knight Frank noted.
“On the surface, with nearly 81,000 units due by the end of 2025, the city appears well supplied. However, once that figure is broken down, we see that just eight new villas are due in Dubai’s prime residential areas between 2023 and 2025 – all of which are on Jumeirah Bay Island,” added Durrani.
He added that developers are not yet equipped themselves to capitalize on the rising demand for luxury housing, especially to meet the growing affinity toward waterfront homes.
The Knight Frank report further pointed out that prices are likely to end the year around 60-80 percent higher than in 2021 for prime Dubai residential units. The report added that the mainstream market is expected to register a price growth of 5-7 percent by the end of this year.
