Dubai maintains its status as the world’s number one market for prime property, with luxury house prices in the Emirate surging by 48.8% in the 12 months to June 2023, according to a report by global real estate consulting firm Knight Frank.
As per the study, the increase in Dubai’s luxury house prices is currently the highest globally and places the Emirati city in the top position in the Prime Global Cities Index for the eighth consecutive quarter.
Property prices in the emirate have now skyrocketed by 225% after reaching a low in Q3 2020 due to the COVID pandemic, stated the Knight Frank report.
Apart from Dubai, luxury property prices also rose by 26.2% in Tokyo, followed by Manila (19.9%), as per the global property consulting firm.
Miami bagged the fourth position with a 7.5% growth, followed by Shanghai (6.7%).
The valuation-based index tracks the prices of luxury properties around the world.
On average, annual prices rose by 1.5% across the 46 surveyed markets, indicating an improvement on the previous quarter.
Over half of the cities (57%) saw prices rise over the quarter, although 14 markets registered price declines over the same period, Knight Frank noted.
“The 1.5% average annual growth remains modest, and well down on the recent peak of 10.2% seen in the final quarter of 2021 but is the strongest rate growth since the third quarter of 2022,” the report stated further.
Other top markets, however, have witnessed a slowdown. This list includes Toronto, where prices fell by 0.1%, London (-0.5%), Brisbane (-1%), Beijing (-1.5%), Hong Kong (-1.5%), Los Angeles (-2.5%) and New York (-3.9%).
Meanwhile, Chinese investments into the projects of Dubai’s biggest property developer, Emaar Properties, have reportedly doubled to comprise 7% of total sales in the first half of 2023, from about 3-4% in the same period a year earlier, according to the real estate giant.
“Pressure on the property market in their home country and relaxation of travel restrictions are driving Chinese investors to return to the Dubai property market,” Sara Boutros, CI Capital’s sector head for Mena real estate and financials, told The National.
“Dubai’s attractive residential rental yields of 6% to 7% and its investor-friendly environment – including low transaction and rental income tax, a US dollar-pegged currency and zero capital gains – all support international flows into the sector,” the official stated further.
As per the analysts, Dubai’s property market, which is booming amid strong demand and robust economic growth post-COVID, has been immensely helped by government initiatives such as residency permits for retirees and remote workers.
Also, the influx of Russian investors in Dubai, since 2022, is helping boom the Emirati city’s property prices.
The Dubai real estate market remained relatively stable until Russian billionaire investments in real estate led to a 47% increase in property costs, Dubai Land Department data showed.
“Within the first few months of 2022, Dubai had its most prosperous real estate market in years. According to the Dubai Land Department, sales in the sector increased by 45 per cent year on year in April 2022 and 51 per cent in May,” commented a report of Khaleej Times, which accessed the data.
It is to be noted that immediately after the start of the Ukraine war in the first half of 2022, the United States-led Western Bloc put a series of sanctions on Moscow (including economic ones), thereby making it difficult for Russian nationals to open bank accounts and send money to the UAE. So, the UAE Central Bank granted Russia’s MTS bank a licence to begin operations in February 2022, thereby providing Russian investors some breathing room.
As per the data from real estate broker Realiste, with the Russian wave of investment subsiding, European investors are finding their mojo in the Dubai property market, by dominating about 30% of the sector’s capital flows. Indian investors rank second with around 20% market share.