According to a real estate firm, the cost of premium homes in Dubai has reached record levels due to the increasing number of high-net-worth individuals (HNWIs) relocating to the emirate.
Sotheby released its International Realty Luxury Outlook Report for 2024, which showed that super-luxury residences in the emirate had seen their sale prices rise in 2023.
The price rise
The prices had risen to as much as AED 14,692 per square foot, which is almost equivalent to the monthly rent of a furnished flat in the emirate.
This is a consecutive increase in year-over-year prices since 2020. Real estate listings in Dubai show that as of January 12th, 2024, the cost of a one-bed unit in Dubai’s premium community can cost more than AED 14,000.
This rent is about the same as the price per square foot for a luxury residence available for sale. But, it is important to note that sale prices in Dubai are still lower than that of other markets like the UK.
Likewise, it is also worth noting that property owners in Dubai do not have to pay real estate taxes.
Influx of millionaires
Sotheby’s data showed that in the last two to three years, after COVID-19 lockdowns, high-net-worth buyers have been flocking to Dubai for relocation.
These include buyers from Europe, such as Germany, France and the United Kingdom. They have been attracted to the emirate due to the prospect of not having to pay any real estate tax.
Last year, a penthouse was sold by Sotheby for $114 million, which was planned at Marsa Al-Arab Hotel in Dubai. It also sold an apartment worth $112 million at Bulgari Lighthouse.
Due to the high demand, prices have recorded a massive increase. The trend is expected to continue because of the political unrest in Middle Eastern countries, which is driving more buyers to Dubai.
The quality of property, value for money and the retail and cleanliness are driving property buyers to Dubai.
Dubai had been transient, as people had come to the emirate to make money and go back, but now people are moving to the emirate for its lifestyle and are sticking around.
Data from CBRE showed that residential property prices had increased 16.9% in Dubai in the first two quarters of the previous year.
Villa prices rose by 15.1%, while apartment prices had increased by 17.2%. Even though prices have risen, buyers are still able to find relative deals that are still undervalued.
In recent years, Dubai has been attracting thousands of millionaires from all over the globe. Data showed that in 2022, almost 5,200 HNWIs had relocated to the United Arab Emirates.
Last year, forecast had shown that a total of 4,500 HNWIs had been expected to enter the UAE. The ultra-high-net-worth individuals spend the winter in Dubai and go to Europe in the summer.