Dubai: Dubai topped the global charts for the biggest increase in luxury home prices during 2021, with Moscow following close behind, according to the latest ‘Global Wealth report’ by the property consultancy Knight Frank. The others in the Top 5 are US destinations – San Diego, Miami and The Hamptons.
Dubai’s luxury homes recorded a 44 per cent increase in values through last year, continuing a strong showing that started in the second-half of 2020. There were multiple deals valued at Dh100 million plus on the Palm, while the Jumeira Bay Island with its Bulgari homes and resort fetched record plot deals.
Based on market talk, January and February of this year continued to reflect sustained demand for prime homes in Dubai, and this could see a further spike if more high networth Russian investments are directed to purchases in the coming months.
Moscow’s second ranking in the Knight Frank report had to do with Russia’s mortgage subsidy programme and “tight supply”, according to the Knight Frank report, which, of course, was done before the conflict with Ukraine broke out and which led to the US and EU announcing sweeping sanctions.
Faisal Durrani, Partner and Head of Middle East Research at Knight Frank, said: “The relentless demand from the world’s wealthy has fuelled a spectacular turnaround in the fortunes of Dubai’s residential market, with the decisive handling of COVID-19 by the authorities attracting the attention of global investors. In a sentiment-driven market, this has helped to spectacularly mark the start of the city’s third property cycle.”
According to him, “ It’s unlikely the growth of 2021 will be repeated this year, but with such limited prime stock, the top end of the market still has room for growth.”
Dubai’s turnaround came after seven years of negative price growth in the previous seven years. Overall property values for the wider market are still some 30 per cent off on their 2014 peaks.
What’s in store for 2022?
According to Knight Frank, Dubai along with Miami could see more price gains at the top end of the market, with developments such as Emaar’s Dubai Hills Estate, Sobha’s Hartland and its latest project, and Dubai Holding with City Walk extension and the La Mer community.
“Far from running out steam, this year we will see the luxury housing boom endure,” said Liam Bailey, global Head of Research at Knight Frank. “Dubai, Miami and Zurich lead our 2022 forecast, with prime prices expected to end the year between 10- and 12 per cent higher.
“Asian cities are expected to trail slightly, but even here, prices will grow. Key themes to watch: Agents will complain about stock shortages, buyers will complain about rising taxes and cooling measures, and city markets will be back in demand.”
What of Moscow’s chances? That’s still the big unknown at this stage, but Russian’s rich will sure be scouting around for locations other than London.
In fact, the Americas as such was the top top performer, accounting for six of the Top 10 rankings and posting an average growth of 13%.
Although, Asia-Pacific (+7.5%) outpaced the EMEA territory (+7.2%), this was largely driven by Australasia (+12.3%). Asia alone managed a relatively modest rise of 5.5% growth, according to Knight Frank.
"Although sunshine resorts from Miami to the Gold Coast shone bright in 2021, with prices climbing 10.2% on average, it was cities that provided this year’s curveball," the report adds. "Overlooked in 2020 as suburbs and resorts attracted those looking for space to hunker down during the pandemic, the city bounced back in 2021, averaging price growth of 8.4%.
"Covid-19, it would seem hasn’t triggered the ongoing flight from bustling urban centres that some were predicting. Even ski resorts, which have in recent years posted fairly frosty results saw average price growth climb to 7.2% in 2021 – Aspen, St Moritz and Verbier were the top performers."