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Following The Pandemic, Dubai Experienced A Notable Increase In Affluent Investors From Around The Globe.
In a groundbreaking achievement for 2023, Dubai’s luxury property market has witnessed an impressive milestone. Recording the sale of an impressive 335 luxury units by the end of July. This year has proven to be a pinnacle for the sector, as indicated by a recent market study.
Furthermore, as the global landscape adjusts post-pandemic and awareness of Dubai’s opulent real estate market grows, the demand for luxury residences and villas is expected to remain robust throughout the remaining months of this year.
To provide context, a mere 12 luxury units were sold in Dubai back in 2014. Along with the majority of these units are located in Downtown Dubai. The numbers soared to 416 units in 2022, primarily concentrated in Business Bay Second and Palm Jumeirah. As highlighted by a study conducted by Realiste, a Proptech venture utilizing AI technology in Dubai.
These luxurious units command a hefty price tag, averaging around $50 million each. For example, a sprawling 19,851 sq. ft. penthouse unit with four bedrooms, is located in Business Bay. That is presently listed at AED 183,625,000 ($50.09 million) and ready for immediate occupancy.
According to the same study, cumulative luxury apartment sales from 2014 to the present day have amassed nearly AED 40 billion ($11 billion).
Dubai Outperforms London, Paris, and New York in Luxury Unit Sales
Knight Frank’s global index report revealed a remarkable 70.3 percent surge in Dubai’s real estate sector by September 2022. Along with a pronounced focus on high-end luxury properties that consistently secured top positions among market values. This expansion notably surpassed the index’s milder rises of 2.5% in London, 8.9% in Paris, and 7.3% in New York.
The surge in demand for upscale real estate in Dubai, as highlighted by the Realiste study, stems from several key factors. Primarily, the substantial expansion in the availability of luxury properties has cultivated an environment of exclusivity and allure. Moreover, individuals of high net worth and astute investors view luxury real estate as a safe harbor for their wealth. Offering a tangible asset that not only bestows prestige but also holds the promise of long-term appreciation.
The forces of globalization and the burgeoning affluence of populations worldwide play a significant role in driving the escalating desire for luxury properties, which are embraced as symbols of status and a refined lifestyle.
Alex Galtsev, the Founder of Realiste, emphasized that demand continues to outstrip supply. A natural recalibration of supply will occur to meet and eventually surpass this demand over time. This trend is evident in the proliferation of upscale projects in Dubai, such as Serenia Living, AVA, Bugatti Residences, and Como Residences, according to Galtsev’s insights shared with Arabian Business
A Surge in Demand and Prices Following the Pandemic
The research indicates that Dubai experienced a significant surge in affluent global investors flocking to the city post-pandemic. This trend is largely attributed to the UAE’s effective management of the Covid-19 crisis.
Following the pandemic’s aftermath, high-net-worth individuals, particularly affluent Russian investors, and entrepreneurs, entered the market. Triggering a transformative shift in the city’s property market dynamics, as elucidated by the study.
Consequently, this surge in investor activity has catalyzed a sharp increase in demand for luxury apartments. Subsequently influencing both their sales and rental prices, according to insights shared by Realiste.
The study reveals that between 2015 and the pandemic period, a luxury apartment with substantial service fees in Dubai typically yielded a net rental revenue of three to four%. In contrast to the 8-9 percent rental yield of a standard apartment within the conventional market.
Presently, upscale luxury units within the city command notably higher rental rates. Coupled with even more substantial returns from resale transactions.
However, Galtsev emphasized that succeeding in luxury real estate investment mandates meticulous market analysis, strategic selection of prime locations, assessment of rental income potential, and a comprehensive grasp of associated expenses.
He added, “By collaborating with advisory firms like Realiste, investors can leverage cutting-edge AI-based tools and data to make well-informed decisions, gain a competitive edge, and optimize their investment outcomes within the luxury real estate realm.”
