Dubai: Will Dubai’s luxury homes pull out another record year of growth in 2023?
Developers sure seem to think so, with the last few days seeing releases from Omniyat (with Orla, starting prices from Dh25 million), MAG of Life (a limited edition of Ritz-Carlton residences at Dh177 million), and Binghatti (with the world’s tallest residential tower in the making having apartments from Dh8 million).
During the same period Alpago Properties sold a 5-bedroom villa on the Palm for Dh130 million and promising that ‘more signature villas to go on the market in the coming months’. Now, Alpago’s portfolio also includes a home on Palm’s Billionaires’ Row that found a buyer for Dh302.5 million.
Enough proof to suggest that 2023 promises a lot more action in Dubai’s premium property space. “Prime values are being fuelled by Dubai’s safe-haven status, an exceptionally diverse range of international ultra-high net-worth individuals in search of (their) second luxury homes, combined of course with the government’s world-leading response to the pandemic, which has spurred business confidence,” said Faisal Durrani, Head of Research at Knight Frank’s Middle East operations.
“Adding to the appeal is its relative ‘affordability’, with prime homes transacting for around $800 per square foot, making Dubai one of the most ‘affordable’ luxury residential markets in the world. Overall residential prices trail 2014 peak levels by 21.4 per cent.”
This then is turning into another incentive for wealthy home buyers, that compared to a New York or London Dubai property offers them more – much more – for the same money. It’s also probably the reason why there is already a waiting list for Omniyat’s newly launched Orla on the Palm, which includes a 50,000 square feet three-level penthouse (price to be announced soon) and a mansion with extreme proximity to the beach (price to be announced).
No flooding the market
Developers are also playing it extra smart; all of the recent luxury home launches have been of the limited edition sort, and offer investors the assurance of tightly managed project completions. The Sharjah-based Arada did the same with the launch of its first project in Dubai, at Jumeirah Golf Estates, and to be repeated early next year with a signature development on the Palm.
“Developers (in Dubai) have not responded to the buoyancy in demand as we have seen in past cycles and with supply remaining limited and demand for luxury waterfront continuing to strengthen, our 2023 prime residential forecast of 13.5 per cent is supported by a clear demand-supply imbalance as well as a positive economic backdrop,” said Durrani. “Indeed, the UAE is expected to have one of the world’s fastest growing economies in the world in 2022. A return to steady and sustainable growth will instil confidence in homeowners and investors alike.”
Go 'branded'
MAG of Life's Dh177 million Ritz-Carlton mansions are a continuation of a trend that's been showing up prominently all through this year - demand for branded homes in Dubai. Over at the Atlantis The Royal residences, a penthouse sold for Dh163 million this year, enough to take the title of being the priciest penthouse deal in Dubai until now. (And which could soon be challenged looking at some of the options that just dropped in the market now.)
"Branded residences are very much in demand right now, especially on Palm Jumeirah," said Georgia Peacock, a Private Client Advisor at LuxuryProperty.com. "Buyers are looking for high-end residences that offer the prestige of a well-known luxury brand.
"Many of the newest branded projects such as Orla and Ava (both managed by The Dorchester Collection) have already sold out as buyers rushed to lock in their units while they still could. Projects that are currently handing over, or due to hand over soon, such as Atlantis the Royal Residences, are also very low on supply as units have mostly been bought up already."
That and more should be more than enough to keep Dubai's luxury property sales cruising along in 2023...
"Money is becoming more expensive, geopolitics more complex and China is no longer powering the world’s economy. Homeowners are having to grapple with the unpredictability of soaring inflation, the rising cost of debt and higher taxes. Although prime markets are more insulated to the fallout from higher mortgage costs, they’re not immune."
Luxury home prices are already dipping in some of the prominent global cities, notably those in the US.
