_THE GLOBAL OUTPERFORMER - DUBAI

Dubai’s prime residential market continues to be a global outlier, with record price growth in 2022, albeit from a low base. Dubai’s safe-haven status is fuelling prime values and an exceptionally diverse range of international ultra-high-net-worth individuals searching for luxury second homes, combined, of course, with the government’s world-leading response to the pandemic, is spurring business confidence.

Faisal Durrani May 24, 2023

RELATIVE AFFORDABILITY AND LUXURY HOMES SHORTAGE

Adding to the city’s appeal is its relative ‘affordability’, with prime homes transacting for around US$ 900 psf, making Dubai one of the most ‘affordable’ luxury residential markets in the world. Overall residential prices trail 2014 peak levels by 15.2%.

Dubai’s perennial challenge has been its ‘build-it-and-they-will-come’ mantra, which has resulted in more homes being built than the market is capable of absorbing. In this cycle, however, the number of new high-end homes planned is failing to keep pace with demand.

Our view for 2023 is that the mainstream market is likely to experience growth of 5–7%, while the prices in the prime market will expand at double this rate at about 13.5% – still the highest growth rate for any prime residential market globally.

Supply is the other critical factor in our 2023 outlook, with just 289 homes in Dubai’s prime precincts expected to be delivered by 2025.

Developers have not responded to the buoyancy in demand as we have seen in past cycles. With supply remaining limited and demand for luxury waterfront continuing to strengthen, our 2023 prime residential forecast of 13.5% is supported by a clear demand-supply imbalance as well as a positive economic backdrop.

A return to steady and sustainable growth will instil confidence in homeowners and investors alike.

Our outlook is not without its risks. Dubai is a world city and as such, is to an extent vulnerable to global macroeconomic conditions. With increasing global economic uncertainty, Dubai is once again emerging as a safe haven destination, just as it did during the height of the Covid-19 pandemic.