Luxury property market in Dubai is primed for growth in 2023 — here’s why
One cannot quite remember the last time Dubai’s real estate sector was struggling because it seems to be on a positive growth trajectory for a while now. So, the only thing one has to figure out is the steepness of the growth curve. In 2023, the sector, particularly the luxury and prime segment, is primed for record growth: Out of the world’s top 25 luxury real estate markets, Dubai ranks first, with prices expected to rise by 13.5% in the coming year(1).
Overseas buyers and high-net-worth individuals continue to exhibit a keen interest in Dubai’s luxury property market. In Palm Jumeriah, one of Dubai’s most exclusive addresses, prime property prices have increased by more than 100% since the start of the pandemic. And across Dubai’s neighbourhoods, residential prices have gone up by 89% in the past 12 months(2).
Average transacted prices stood at AED 3,220 per square foot, which makes Dubai one of the most affordable luxury residential markets in the world. The mainstream market is expected to register price increases of 5-7% in 2023. The city has seen a huge influx of wealthy residents in the past year, with much of the traffic accounted for by Russians looking for a safe haven for themselves and their wealth in view of the war in Ukraine.
Dubai continues to attract property investors
There are several reasons why Dubai’s luxury property market is primed for growth in 2023. The Emirate’s safe-haven tag, booming economy, the commendable government response to the COVID-19 pandemic, and high levels of business confidence are incentivizing a diverse range of global ultra-high-net-worth individuals looking for luxury homes in Dubai.
Additionally, the FIFA World Cup has had a positive impact on the luxury real estate sector, boosting property prices. With the event being held in a Gulf country for the first time, interest levels were very high, and huge crowds thronged Dubai. The overwhelming need for accommodation and limited vacancies in Qatar benefitted Dubai greatly. This gave a fillip to the already booming real estate sector.
FIFA-related tourism has not only propped up the real estate market but also added a shine to the hospitality sector and the short-term rental market. Property dealers are just waiting in the wings to reap the benefits of the cumulative impact on the luxury residential real estate sector. Prime properties in Dubai’s neighbourhoods have already doubled their prices, and bookings are up, thanks to global high-net-worth individuals.
Such is the interest level of ultra-high-net-worth individuals looking for second homes in Dubai’s premier areas that a supply shortage is already being felt. Incidentally, this time around, investors are more interested in buying homes to live in rather than letting them out or making speculative purchases, as was the trend earlier. Overall, annual growth in the luxury real estate market is likely to hover around 13.5%. Even so, it will be the highest growth rate in any prime market globally.
