Looking at the high end – Dubai’s luxury market
Gavin Comerford, Projects Director at CHI SOL Investments Limited shares his industry experience on Dubai’s ever growing high-end luxury real estate market
Over the years Dubai has established itself as a luxurious, modern and stable destination for the well to do and the famous. As a result, an increased number of high-end investors have started to look at Dubai as a hub of opportunity and stability in recent years. Numerous celebrities – including the likes of Brad Pit, Madonna and Giorgio Armani – had already invested in Dubai’s real estate market prior to the pandemic. More recently, the mega wealthy have begun relocating not only their families but also their businesses to Dubai, and more are expected to come, with the UAE Central bank forecasting a 4.2% GDP growth for 2022 – double what was achieved in 2021. As the number of investors rises, so are the high-end luxury real estate market opportunities.
New buyers in Dubai’s real estate market are not merely investors, but end users looking to set down their roots. In looking for a property which is meant to become a home, these individuals are looking for ultra-luxurious properties with ample space for their families, to entertain guests and even host extended family in some cases. In the last few years, there has also been increased demand for turnkey properties which are already fully furnished – buyers want to be able to show up with only their luggage to a house which is already equipped with everything they might need.
While Dubai offers several luxurious property options, this is still a severely underdeveloped segment with limited supply available. This is something that’s evident when you consider the notable growth in the prices of ultra high-end properties. According to a recent study done by Knight Frank, ultra-high-end properties saw an exponential increase of 44% in 2021.
Despite the increase in property rates, Dubai’s real estate market still outperformed most global property markets including Paris, London, New York and Hong Kong. According to the annual transaction report issued by the Dubai Land Department, 84,772 transactions were recorded during 2021, representing a value of nearly AED300bn ($82bn).
Changing Demographics
Of late, the demographics of affluent individuals looking to relocate to Dubai has also shifted. Previously, Asian and British citizens were the most widespread high-end investors in Dubai, but this has begun to change, with more buyers now coming from Central and Eastern Europe. The shift in new nationalities looking to invest in Dubai comes as individuals seek a safe and stable country to put down their roots.
No country was left unscathed by the pandemic, however, the way the United Arab Emirates handled the situation made the wealthy take note. Throughout the pandemic the country was open for business, PCR tests were readily available with quick turnaround times, vaccines were quickly rolled out to residents, and although there was a lockdown, it was brief and even the country’s tourism sector opened quicker than most. Despite the challenges the country faced, it found ways to support residents and businesses throughout the pandemic – this is something that the global community took note of.
In addition to its notable response to the pandemic, Dubai has put numerous new policies in place to make the emirate more appealing to investors. Being an income tax free country was already a great start but evolving its Foreign Ownership Laws and introducing the 10-year visa, also known as the ‘Golden Visa’, helped make the emirate an even more attractive and secure destination. The new law allowing investors to apply for a Golden Visa via an AED10 million investment allows even greater accessibility to the country for the affluent, while new flight routes and more direct flights to Dubai have also made a significant difference.
One of the significant challenges in accommodating this market segment is the ability to acquire land in affluent areas. For example, Hillside at Jumeirah Gulf Estate has only 20 mansions available with limited room for expansion in the same area and most of these units have already been sold. Waterfront properties, which are very popular in the eastern European market, are also limited and new arrivals to Dubai are often sceptical about moving too far inland. In addition, some buyers are not interested in off-plan properties – they want to see the final product, meaning the turnaround time from acquiring land, construction to having it furnished needs to be quick without compromising on quality.
EXPO 2020 Dubai has also helped create more awareness of ‘new Dubai’ and has aided accessibility to the broader emirate. However, there is a need to develop more affluent communities within Dubai, along with the necessary infrastructure to accompany it including schools, medical facilities and retail areas.
While Dubai’s high-end real estate sector is a rapidly growing niche, it’s not something just anyone can develop. It requires large investments and a full-fledged team who can deliver a quality 360 solution to buyers. This being said, it is a profitable sector with growing opportunities for those able to enter the segment. Going forward, the United Arab Emirates, specifically Dubai, will continue to attract high net worth individuals to its shores, increasing the demand for ultra-high end luxury villas.
Article Source: https://meconstructionnews.com/