Dubai is breaking records in the uber-luxury real estate market

A quick glance at the news over the last year reveals several record-breaking uber-luxury property sales in Dubai, many of which cost tens of millions of dollars.

As we all know, Dubai is peppered with uber-luxury, bespoke properties, many built to the owner’s specifications, with unique materials, features and designs.

The Dubai property market saw a post-pandemic uplift, and the uber-luxury market looks set to remain buoyant throughout 2023 and well into 2024, at least.

Property developers like DAMAC saw profits return last year following the challenges associated with the pandemic. The company is behind a number of increasingly luxurious property developments in Dubai and further afield, eyeing the growing desire for luxury property.

There has been a global rise in the number of Ultra High Net Worth Individuals (those with assets in excess of $50m), with Credit Suisse suggesting UHNWIs grew by 50% during the past two years.

The surge in wealth is credited to rising house prices and booming stock markets.

Rising geopolitical tensions and global economic instability has left the uber-rich looking for solid property investments in a stable, growth economy – and Dubai ticks those boxes.

Despite the record sales figures – in individual property terms – Dubai’s real estate market remains globally competitive. The saying ‘getting more bang for your buck’ comes to mind; in older markets such as London or New York, the size and style of property are often limited by the surroundings, planning laws and preservation regulations.

Dubai has space, greater planning freedom, and the infrastructure to support creative design and build.

The government allows people to purchase land to build on, providing they follow developers’ guidelines, and get architectural designs approved from the developer and land department before beginning construction.

Last year, Abu Dhabi Islamic Bank (ADIB) launched a plot financing offering enabling customers to purchase a piece of land as an investment or to build a house.

Uber luxury buyers – if not buying purely as an investment – will normally have very specific ideas in mind when it comes to property design, so the build-from-scratch option makes a great deal of sense.

And of course, from a paperwork point of view, it’s easier to build a property from your own designs than to try and amend an existing property.

Cash remains king in a majority of Dubai purchases, too, with records showing around 70% of purchases are made with cash rather than loans or mortgages. This, of course, means the market is less twitchy when it comes to interest rates.

While interest rates are variable around the world – often meaning people can only access fewer funds for a higher interest rate – Dubai remains a safe haven, with lower-than-average mortgage rates for those that purchase with a mortgage.

Of course, in the uber-luxury sector, mortgages are rarely seen. This is a sector which attracts those with great liquidity or assets that can be readily transferred or exchanged.

Dubai’s growing market for uber-luxury property bodes well for the emirates’ property sector, with expectations that 2023 will see an uber-luxury property market valued in multibillion dirhams.

Scarcity certainly increases prices, with some prime locations across Dubai seeing a doubling – or more – of prices year-on-year. In the last year or two, we have witnessed the rise of a new class of properties over AED75m ($20 million), commonly known as super-prime properties.

And many of those super prime properties are available by my own uber-luxury property company, AHS Properties.

In Dubai, I believe we have a ‘perfect storm’ of world-class infrastructure, highly sought-after communities, sensible, mature and transparent planning and real estate regulations, and a strong, growing economy. These factors, I believe, mean we will continue to see steady growth in the uber-luxury property market.

Dubai: 5 most affordable areas to rent a villa revealed

Source: Khaleej Times

Dubai is facing a shortage of villas as demand outstrips supply, resulting in rentals seeing more than double jump as against the apartments in the first half of this year.

Industry analysts and executives say that the trend of demand for bigger homes that started after the Covid-19 pandemic is sustaining and is now being driven by new visa reforms such as Golden Visas as well. This resulted in increased demand both from tenants and buyers for villas and townhouses.

During January-June 2022 period, villas and townhouses rents in Dubai jumped 64 per cent and 33 per cent, respectively, as compared to a 29 per cent increase in apartments, reflecting demand for villas staying strong even after the pandemic, according to Betterhomes data.

It said villa “demand is still firmly outstripping supply, and it is doing so at a more sustainable rate.”

According to Asteco’s second-quarter 2022 report, 780 villas were completed in the first half of 2022 while a total of 3,300 are expected to be delivered during the whole year.

The report revealed that villas recorded a six per cent rise in rentals and four per cent for apartments in Q2 whilst annual growth stood at 23 per cent and 15 per cent, respectively.

Area Rent from (Dh) To (Dh)
Damac Hills 2 40,000 80,000
Mirdiff 75,000 125,000
Town Square 100,000 130,000
Jumeirah Village 115,000 150,000
Dubai Silicon Oasis 130,000 155,000
Source: Asteco

Dubai’s five most economical areas for yearly rentals for a 3BHK villa are:

“Demand for larger unit types, particularly villas and townhouses, with adequate useable outdoor areas (i.e. balconies and gardens) and a strong community offering remained the focus for residents, thus driving rental and occupancy rates,” the report said, adding that average villa prices rose by four per cent, same as the apartment prices in the second quarter.

Abbas Sajwani, CEO of AHS Properties, said housing demand is rising in general, thanks to forward-thinking social and economic reforms passed by the Dubai government in the past year, boosting its value proposition for foreigners to come set up businesses and work here.

He credited the government’s excellent handling of the pandemic that encouraged foreigners to move here as Dubai is ranked as one of the safest cities in the world to live during the pandemic.

“As for the rising demand for villas, it has been widely recognised that Covid-19 changed customer preferences towards private outdoor living space. People moved from towers and high rises with shared communal spaces and elevators, to secure more private outdoor areas for their own leisure and for their children to play. Additionally, there is a rising demand for ultra-luxury homes,” said Sajwani.

AHS CEO added that the company is focusing on this niche market opportunity in buying and selling homes worth Dh50 million and more.

“The luxury property sector has been attracting investors and high net worth individuals equally. However, with reformed visa rules set to be implemented in September 2022, we will see more foreign investors venturing into the market. The luxury property market is expected to double its share this year due to an influx of keen investors,” he added.

Ayman Youssef, vice-president of real estate firm Coldwell Banker UAE, said Dubai is reportedly facing a shortage of villas because the effects of the pandemic led people locally and globally to realign their priorities towards home, family, health and wellness.

“This has been one of the biggest contributors to the rise in demand for villas and other luxury properties. In addition, the introduction of various new visas, the benefits of the Golden Visa along with the new real estate laws, have encouraged people to consider investing in bigger properties which they can use for their personal, permanent and long-term stay. This has encouraged major developers to plan more luxury and villa property launches,” he said.

He said 2021 witnessed a plethora of buyers for luxury villas and penthouses who were looking for better quality properties and bigger layouts and sizes.

“Transactions in certain luxury areas like Palm Jumeirah and Emirates Hills have soared and we’ve seen some incredible properties sold in 2021. Owing to the strong demand in the luxury segment, inventory is low. While low inventory sure has stimulated the prices of villas and other luxury properties to rise, the other reason that has led to the rise in price and rents is the relaxation of visa and real estate investment laws,” added Youssef.

Coldwell Banker’s vice-president said two years ago, people bought properties primarily for investment purposes but today things are a lot different. “Expats are considering Dubai as their permanent residence and are therefore choosing villas and bigger properties keeping in mind the long-term benefits,” said Youssef.