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Dubai luxury real estate market breaks another record

Dubai saw a surge in the influx of wealthy investors from around the world after the pandemic

Dubai has set a record in the luxury real estate market this year, with the sale of a total of 335 luxury properties by the end of July, making 2023 the most successful year for the segment, a new market study has revealed.

In addition, strong demand for luxury residences and villas is forecast for the remaining months of this year. This comes amid the ongoing global post-pandemic realignment and growing global awareness of Dubai’s largely untapped opulent real estate market.

To put this into perspective: In 2014, only 12 luxury properties were sold in Dubai, most of them in Downtown Dubai. The number rose to 416 units in 2022, mainly in Business Bay Second and Palm Jumeirah, according to the study by Realiste, an artificial intelligence-based proptech company in Dubai.

One luxury property has a price tag of around 50 million US dollars. For example, a ready-to-occupy 4-bedroom, 19,851 square foot penthouse unit in Business Bay is currently on offer for AED 183,625,000 ($50.09 million).

According to the study, luxury apartment sales have generated around AED 40 billion ($11 billion) from 2014 to date. Dubai outperforms London, Paris and New York in terms of luxury property sales. According to Knight Frank’s global index report, Dubai’s real estate sector had improved by 70.3 percent in September 2022, with a focus on expensive luxury properties that regularly ranked among the top 5 most valuable real estate markets. This is far higher than the index increases of 2.5 percent in London, 8.9 percent in Paris and 7.3 percent in New York.

The further study states that the increase in demand for expensive real estate in Dubai is driven by several factors. “On the one hand, there is a huge increase in the supply of luxury properties, which creates exclusivity and desirability. In addition, wealthy individuals and investors view luxury real estate as a safe haven for their wealth and as tangible assets that offer both prestige and long-term appreciation,” it says. Globalization and the growth of wealthy populations worldwide are also contributing significantly to the rising demand for luxury real estate as a symbol of status and lifestyle.

“If demand exceeds supply, supply will naturally adapt to demand and even exceed demand over time. This is now evident in the launch of many luxury projects in Dubai, including Serenia Living, AVA, Bugatti Residences and Como Residences,” says Galtsev.

The study states that Dubai has seen an increase in wealthy investors from around the world following the pandemic, largely due to the UAE’s successful handling of the Covid-19 situation. “Shortly after the pandemic, wealthy individuals, especially wealthy Russian investors and businessmen, entered the market and changed the dynamics of the real estate market in the city,” the study said.

This has led to a sharp rise in demand for luxury apartments and their sales and rental prices. The study states that between 2015 and the post-pandemic period, a luxury apartment with high service charges in Dubai generated a net rental yield of three to four percent, compared to 8-9 percent for a standard market apartment. High-end luxury properties in the city are currently achieving significantly higher rents and even higher returns on resale.

However, Galtsev emphasized that extensive market research, careful selection of prime locations, evaluation of rental potential and a clear understanding of the associated costs are crucial to the success of luxury real estate investments.


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