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The world’s most iconic manmade island continues to attract luxury buyers, as property values continue to rise. Keith J Fernandez takes a look at the factors driving the trend
Property prices continue to skyrocket on The Palm Jumeirah, with the island setting new records for villas and apartments even as demand begins to soften in other areas across Dubai. Data from real estate consultancy Knight Frank indicates that prime and ultra-prime areas, including The Palm Jumeirah, Emirates Hills and Jumeirah Bay Island have surged by 58.9 per cent over the last 12 months.
However, villa prices across the emirate grew by 3.2 per cent in the first quarter of the year, down from 3.4 per cent in the final three months of 2021, marking the slowest quarterly increase in over two years.
Overall, house prices in Dubai grew by 10.6 per cent last year and rose by a further 2.6 per cent during the first three months of 2022, according to Knight Frank’s analysis. The latest increase leaves values 11.3 per cent higher than Q1 2021; the highest rate of annual growth since January 2015.
The Palm Jumeirah and Emirates Hills continue to cement their iconic status, with global buyers continuing to jostle for an address in Dubai’s most exclusive enclaves.
Villa prices on the Palm Jumeirah, by contrast, have increased by 38.6 per cent in the last 12 months, says Faisal Durrani, Partner — Head of Middle East Research, Knight Frank. “The Palm Jumeirah and Emirates Hills continue to cement their iconic status, with global buyers continuing to jostle for an address in Dubai’s most exclusive enclaves,” he says.
At Dh3.10 billion, the area runs close behind Mohammed Bin Rashid City (Dh3.19 billion) in terms of total sales volumes for the first quarter of the year, with Downtown Dubai the third-most popular neighbourhood with Dh2.6 billion, according to data from Luxhabitat Sotheby’s International Realty, based on data from the Dubai Land Department.
In March, the island smashed a seven-year record – held by broker Chris Boswell for a Dh185 million Palm beachfront mansion sale – for a Dubai property sale after luxury agency Belleview Real Estate sold a ten-bedroom, custom-built villa for north of Dh280 million. Besides 33,000 square feet of living space and a gym and hair salon, the property sits on more than 70 metres of private beachfront.
Often referred to as the eighth wonder of the world, The Palm is considered to be an exclusive destination.
In May, Luxhabitat announced that a European buyer had purchased a Los Angeles-inspired 8,600 square feet beach mansion on The Palm Jumeirah at Dh63 million. The same month, two villas at the Six Senses development also sold for over Dh80 million each, according to tracking data from Dubai Land Department.
Realtors say The Palm holds its own because it offers an unparalleled living experience for luxury buyers. “Often referred to as the eighth wonder of the world, The Palm is considered to be an exclusive destination. The lifestyle it offers by living close to the beach and sea is surreal and the prices being offered today are unbelievably attractive,” says Rakesh Mirchandani, Founder and Chief Executive Officer at boutique real estate firm RNR International Real Estate.
“Most of the buyers that buy on The Palm want to live by the beach or the sea. With the recent opening of the beach club, Sãn Beach and new five-star hotels such as the St Regis Dubai, The Palm, this island has much more to offer now.”
Waterfront freehold property has always been in high demand and nowhere in the Emirate can match the range, quality and accessibility quite like Palm Jumeirah.
RNR agents have similarly clocked high-value transactions. Luxury specialists Beesham K Lohana and Kavita Kumar recently sold two custombuilt villas for Dh62,000,000 and Dh60,000,000 respectively.
Even at the top end of the market, luxury property in Dubai offers better value than comparable units in other major cities around the world. “Compared to other megacities, a square metre in Dubai is be about five times less than in London and three to four times less than in New York or Singapore, as per sources. Despite the increase in prices, Dubai, as an overall is still considered to be one of the most affordable megacities in the world,” Mirchandani says.
Connor Savage, Associate Director at Powerhouse Real Estate, agrees, “Waterfront freehold property has always been in high demand and nowhere in the Emirate can match the range, quality and accessibility quite like Palm Jumeirah.”
He says The Palm’s attraction lies in the fact that it offers something for everyone; from a studio unit all the way through to custom-built super-prime beach front mansions — and that it offers waterfront living while real estate developments continue to expand further inland.
“It has had many years to iron out teething problems, facilitate the construction of hotels and shopping malls, bars and restaurants at multiple locations. Well considered to be the most recognisable address in the world, it has a growing list of merits that are now drawing the interest of clients the world over,” Savage says.
“With the recent property boom, buyers seem confident that paying more now will bring even greater rewards in the months and years to come.”
But for those who find The Palm lifestyle just a shade too far, there are several other options that offer a similar lifestyle at significantly lower valuations. Savage says buyers looking for a similar category can choose from Bluewaters Island, Dubai Marina, Madinat Jumeirah Living or La Mer.
Mirchandani says Dubai Marina, in particular, suits buyers looking for apartments in high-rise towers with waterfront views. But for villas that deliver the same sort of luxury feeling, he points to Dubai Hills Estate, which has benefited from a surge in demand for villas and townhouses in the wake of the pandemic.
“Dubai Hills Estate is a community developed by Emaar. It has one of the best golf courses in the world and one of the largest parks in Dubai. The golf course offers spectacular views of the Downtown Dubai and Business Bay skyline, including the Burj Khalifa. Prices for a five-bedroom villa in Dubai Hills Estate start from Dh12 million,” Mirchandani says.
Data bears them out. According to data from real estate platform Property Finder, the highest search volumes in April were for sales in Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay, Jumeirah Village Circle, and Jumeirah Beach Residence. In the villa and townhouse category, Dubai Hills Estate, Palm Jumeirah and Arabian Ranches dominated overall searches in the same month.
Overall, Mirchandani says that buyers anywhere in Dubai will benefit from visa reform. “The recent announcement on the 10-year golden visa for an investment of Dh2 million and above will be compelling for many investors and for those who plan to invest and move here. Although it’s expected to be in effect from September onwards, we have already seen an increase in enquiries and interest from clients to invest in real estate.”
Capital values look set to remain attractive over the medium term. Knight Frank forecasts that while another 100,000 units will enter the market by the end of 2025, with over 50,000 homes due to be completed during the remainder of 2022, just 25 per cent of the homes expected by 2025 are forecast to be villas.
“The impact of the supply pipeline on the market’s outlook needs to be segmented by both property type, as well as location. Through to the end of 2025, just eight new villas are expected to be built in Dubai’s prime residential areas, hinting strongly at continued outperformance of villas at the very top of the market as there is nothing to suggest an easing of the luxury home drought any time soon,” concludes Durrani.
