The luxury segment accounts for an almost negligible percentage of all properties in Dubai, but its value certainly has a crucial impact on the real estate market. “The prime segment is quite modest, with most growth concentrated in low and mid-market segments,” says David Godchaux, CEO of Core-Savills, tells PW. “We’ve categorised the segment as anything above Dh3,000 per square foot, which effectively excludes 97 per cent of the market. Only 3 per cent of transactions that are above this amount.”
Some of the big-ticket sales last year were an Emirates Hills residence that went for Dh101 million and a penthouse in Omniyat’s One Palm for Dh102 million. The highest single transaction in the third quarter last year was another villa in Emirates Hills that was sold for more than Dh95 million or Dh4,170 per square foot. Godchaux says a few hotel apartments such The One Dubai Marina by Wyndham were sold at prices over Dh5,500 per square foot.
New properties on the card include CityWalk, Bluewaters Island, Bulgari, Dubai Creek Harbour and Dubai Hills Estate. Branded residences such as Armani and Palazzo Versace are also commanding high prices. While high-end properties share a steep price point, they tend to have varying selling points.
In Hillside, a sub-community in Jumeirah Golf Estates by Chi-Sol investments, exclusivity is key. With a target delivery end of the year, Hillside will be an exclusive neighbourhood of only 20 villas, each with a starting price of Dh24 million. At this level of the market, according to the developer, the residences must have a specific set of luxury elements.
Jumeirah Golf Estate’s signature luxury villas at Redwood Avenue, meanwhile, is banking on its strategic location as one of its key differentiators. Located close to the World Expo 2020 site, the villas start at Dh11 million each.
“[As] Dubai continues to transform, Jumeirah Golf Estates’ strategic location in the heart of new Dubai means that it is at the centre of Dubai’s transformation,” Alya Mahdy, executive director, commercial, Jumeirah Golf Estates, tells PW.
Here’s are some of the factors that have helped drive demand for Dubai’s luxury property segment.
1. Location. With location as a prime differentiator, land becomes crucial. And properties commanding views of landmark projects have a ready stream of buyers. For the Hillside development, land was one of the crucial factors in the property being considered attractive. “We are actively looking to acquire land, but good land is very hard to find in Dubai,” Hillside said in a statement.
There was time when the centre of Dubai would keep shifting — first in Deira, then Bur Dubai, right up to the other end in Dubai Marina, before moving to Downtown Dubai. Godchaux says, “There is no centrally located land. Earlier, [prime] was a piece of land somewhere after Downtown and before Marina. Emirates Hills and Palm Jumeirah when they were built, you had to be a visionary to see their appeal. Now these locations are unavoidable.”
Godchaux predicts the area between Burj Al Arab and Satwa to become the most prime piece of land not developed in freehold terms. “There is demand for low-rise, very prime, very sought-after properties. It’s the best part of the city.”
2. Not just sprawling villas. The new luxury buyer in Dubai is not looking only for villas. Analysts point to a change in taste. “There is really a shift,” says Godchaux. “We have seen a larger number of luxury apartments built rather than only high-end villas catering to the luxury buyer. It is luxury but not necessarily a villa. Buyers are looking for a penthouse, or apartments with private access, high ceilings.”
Examples include Emaar Il Primo, Volante in Business Bay and One Palm. Volante consists only of two apartment types: 5,000-sq-ft half-floor units and 10,000-sq-ft whole-floor units.
3. Global competition. Mahdy says, “The Dubai property market has matured, attracting investors from East and West thanks to its strategic position, attractive quality of life and access to key facilities.”
However, Godchaux warns that Dubai now competes with other global cities. “Potential buyers may look at Singapore Monaco or London as options. Developers really have to keep that in mind,” Godchaux says.
The buyer profile has accordingly changed. “The profile of buyers is not the same. The ultra segment was made up of people who were convinced that they wanted to have strong interest in Dubai. Now buyers compare [Dubai] with other global cities they are invested in,” says Godchaux. “The customer has experience has to be the same as in Singapore, Monaco and Tokyo.”
The luxury shopper demographic has also evolved in response to geopolitical events and macroeconomic factors. “We see Russia coming back, while the GCC has always been strong,” says Godchaux. “Indian buyers are strong. It is expanding a little bit to Europe as Dubai’s profile is rising.”
4. Is it worth it? Gone are the days when the market lapped up anything in the name of luxury. “The market for luxury residential property, especially villas, changed fundamentally in late 2008 and 2009. Prior to that, numerous luxury projects were associated with sporting personalities or celebrities based on a perceived lifestyle experience,” says Mahdy. “The luxury market was characterised by a high volume of both off-plan sales and rapid price escalation, fuelled by speculation due to a limited supply of completed luxury products. Investors were not value-conscious and were not evaluating purchases on purely financial or functional terms. Buyers were willing to pay a premium for the intangible lifestyle associated with those projects.
“However, the market no longer attaches a premium value to such aspirational factors, and is more focussed on value for money and the level of financial return available from investing in the real estate sector.”
This means that even at the top end of the market, the property has to provide value for money, which Godchaux says is reflective of a global trend.
5. Turnkey residences. There is now a considerable market for ready-to-move-in living spaces. “The shell-and-core option means that villas come at an advanced stage of construction, but give customers the flexibility to bring their own creativity into the final touches, including flooring, tiles and windows, and we have seen many different styles,” says Mahdy.
Godchaux adds, “We see a rising section of buyers with lock-up and leave mentality. They don’t want to bother about furnishing and prefer turnkey solutions with a high-end lifestyle. Branded residences are gaining momentum.”
