Prime property prices in Dubai have seen a jump of 89% in the past 12 months, as wealthy buyers flock to the city.
According to Arab Net, real estate consultancy Knight Frank explained that insatiable demand has led to more than 100% rise in villa prices in luxury projects such as Palm Jumeirah, Emirates Hills and Jumeirah Bay Island since the beginning of the pandemic.
This shift represents a significant departure from the emirate's previous two market cycles, which were largely associated with buy-to-let or buy-to-resale.
Demand for real estate is booming in Dubai, where the government's handling of the pandemic and flexible visa policies are attracting more foreign buyers. The emirate's luxury property market is benefiting from an influx of wealthy investors such as Russians seeking to protect their assets, bankers fleeing strict Covid restrictions in Asia and wealthy Indians looking for a second home abroad.
Faisal Durrani, Head of Middle East Research at Knight Frank, said: “Prime residential values in Dubai continue to rise, growing by 29% in the third quarter alone, driven by the continued influx of ultra-high net worth individuals heading to key areas of Dubai in search of a second home. Quoted by Bloomberg.
Real estate sales over $10 million have also reached a new high. During the first nine months of the year, there were 152 deals in so-called high-quality sales, up from 93 deals last year.
This year saw a deal worth over $80 million in Dubai, the city's largest ever residential real estate deal.
On the other hand, the number of planned new luxury homes failed to keep pace with the demand, which led to a shortage of seafront homes in particular.
Durrani added: We see that only 8 new villas are to be built in the main residential areas of Dubai between 2023 and 2025, all on Jumeirah Bay Island.
He continued, Developers have not yet rushed to bring new projects to the market, as we have seen in the past, to take advantage of the tsunami of demand for luxury housing.
In the short to medium term, Knight Frank expects prices to grow 5% to 7% by the end of the year, ending 2022 up 60% to 80% from last year.
A strong dollar and higher interest rates could affect the Dubai property market, although the spread of cash buying is expected to protect the market to some extent, said Head of Middle East Research at Knight Frank.
