In Dubai, Palm property values are truly reaching for the skies. How much further can they rise as more Dh100 million plus homes are sought by the rich? Image Credit: Ahmed Ramzan/Gulf News

Dubai: Will property value gains at Dubai’s Palm Jumeirah, Emirates Hills and Jumeira Bay Island zoom up 100 per cent in 12 months? That looks quite a distinct possibility, with market sources talking about a handful of potential deals that could nudge values at these three super-prime spots in the city.

By the looks of it, these locations have already done well in the 12 months to end September, having put on 88.8 per cent. And 29 per cent value gain from July, as the rush continues among the rich – from the UAE and outside – to secure what they would deem as a favourable deal. Palm has just recorded a Dh302.5 million villa sale, easily the priciest transaction in Dubai’s freehold space.

In fact, according to the conultancy Knight Frank, the Palm has already seen values spike more than 100 per cent since the start of the pandemic in 2020. Sales of $10 million homes – which the consultancy defines as ‘ultra-prime homes’ - are already at a new record.

“The first nine months of the year have registered 152 ultra-prime sales, eclipsing last year’s all time high of 93,” said Faisal Durrani, Partner – Head of Middle East Research. “And 93 of these deals have taken place in Q3-2022 alone.”

According to other data, there were 16 transactions that led to the seller netting more than Dh100 million in the year-to-date.

“Prime residential values in Dubai continue to strengthen, fuelled by a persistent deluge of UHNWI individuals who are zeroing in on Dubai’s premier districts, in search of second homes,” said Durrani. “This trend marks a significant departure to the emirate’s two previous market cycles, where the overriding flavour of buyers was linked to buy-to-let or buy-to-flip purchases.

Check out these price per square foot
Currently, the average on the Palm Jumeirah is Dh3,054 per square foot, while at Emirates Hills, it’s at Dh5,220 and Dh6,345 for Jumeira Bay Island, locations where further new builds are limited.

"The Covid-comeback cycle which began two-and-a-half years ago has thus far seen values increase by 101% on Palm Jumeirah and 98% on Jumeira Bay, while Emirates Hills has experienced a near doubling in prices over the same period," according to the Knight Frank data.

Still price favourable

And yet these locations offer relative bargains compared to peers elsewhere. “At around Dh3,200 per square foot, or about $870, Dubai’s prime residential neighbourhoods remain amongst the most affordable in the world,” said Andrew Cummings, Partner – Head of Prime Residential at Knight Frank. “This, combined with the high quality of residential product now available in the upper echelons of the market, is cementing Dubai’s position as one of the world’s leading second homes markets.”

There's a supply shortage for luxury
Dubai's property market is likely to see another 81,000 new homes by end 2025.

"The city appears well supplied - however, once that figure is broken down, we see that just 8 new villas are due in Dubai’s prime residential areas between 2023-25, all of which are on Jumeira Bay Island," said Faisal Durrani. "Developers have not yet rushed new projects to market as we have seen in the past to capitalise on the tsunami of demand for luxury housing.

“The overriding challenge for the emirate is the shortage of waterfront homes. The revival of Deira Islands as Dubai Islands (by Nakheel) should help to alleviate the drought of ultra-prime homes once the development plans are finalised, albeit it is likely to be a few years yet before the first homes are ready to move into here.”