BackWe have talked about how busy the Dubai real estate market is at present and has been over the past 24 months. With record-breaking transactions taking place every quarter, the city has seen a large uptick in activity from international buyers and investors. And now that is an official statistic - according to a recently published report, Dubai is the 4th most active luxury real estate market in the world. In 2022, Dubai recorded 219 transactions valued at $10 million (AED 36.7 million) or higher. The cities that round out the top 3 - New York, Los Angeles and London - recorded 244, 225 and 223 sales respectively, beating out Dubai by a fairly narrow margin.
When looking at the super prime end of the market, Dubai ranks fifth overall for homes sold at a price of $25 million (AED 91.8 million) or higher, with Hong Kong joining the cities mentioned above to fill out the top four. On the whole, Dubai recorded 90,881 transactions last year, breaking its previous record of 81,182 transactions in 2009.
There are several factors that have contributed to the recent growth in Dubai real estate, chief among them a well-planned and coordinated pandemic response. Dubai was one of the first global cities to emerge from the lockdown and assume a state of normalcy. By carefully implementing pandemic controls and rolling out a robust vaccination drive, Dubai positioned itself as a safe haven where visitors from across the world could converge. From the third quarter of 2020, it was already becoming obvious that the market was on its way to recovery.
The surge in demand from both local and international buyers has pushed the market into a state of undersupply, especially at the higher end of the residential sector. Luxury villa sales have been at the forefront of the news - most notably, record-breaking transactions in Emirates Hills and Dubai Hills Estate as well as the most expensive villa sale in Dubai history at roughly $163 million (a bit shy of AED 600 million). Transactions of that nature remain few and far between, however, due to the lack of availability. This is one of the factors that has contributed to a 44% growth in property values over the course of 2022.
It’s worth noting that despite such rapid growth, Dubai is considered to be a fairly valued market and was ranked as the 2nd most undervalued real estate market in the world according to the Global Real Estate Bubble Index released by UBS. On a price per square foot basis, $1 million (AED 3.67 million) will buy over 1,100 square foot of property, which is anywhere from three to five times as much as you would get in cities like London and Hong Kong.
International investors are increasingly seeing the value that Dubai real estate has to offer, particularly those from around the Asian subcontinent and Europe. Buyers from Eastern Europe made up the majority of the buying demographic last year, though it is expected that Chinese investors will begin making inroads again now that China’s economy has opened back up. Industry analysts have predicted that Dubai will be leading the global market in terms of price growth, but property prices in the city will grow at a slower pace than in previous years.
