Dubai luxury real estate is thriving with the third-highest price surge worldwide

Amidst a phenomenal increase in demand for ultra-luxury real estate, prime residential property prices rose by a whopping 17.4% in 2021, making it the third-highest globally. According to Savills World Cities Prime Residential Index, the capital value of upscale real estate reached figures seen during the 2008 peak in the second half of the previous year (2021) due to several key factors. These include excess of demand over existing supply driven by HNWIs and HNWIs, who have relocated to the city opting to benefit from competitive rates and successful COVID-19 measures. That being said, as reported by Savills World Cities Prime Residential Index, the average prime property prices in Dubai amount to USD 630 per sq. ft, which is significantly lower compared to the city’s global counterparts, for example Hong Kong (USD 4,530), New York (2,580), Geneva (USD 2,250), Tokyo (USD 2,220) and Shanghai (USD 2,200). It is worth noting that the Savills analysts predict a further price growth of 4–6% in 2022.

The top-performing areas in terms of sales volume were Palm Jumeirah, Downtown Dubai and Business Bay. In fact, Palm Jumeirah saw multiple real estate transactions worth over AED 50M (USD 13.6M), including the second most expensive penthouse in Atlantis The Resort & Residences sold by Metropolitan Premium Properties for AED 64M (USD 17.4M), sold at the end of 2021. In the emirate’s luxury real estate market, the Al Barari area has posted one of the highest sales figures thanks to its new launches, including the Lunaria project by Al Barari Development Company LLC, followed by Jumeirah and Arabian Ranches 1. The flagship palm-shaped island has started the new year tremendously, with the launch of Six Senses The Palm, which is the first Six Senses branded hotel and residence in the UAE. Offering ultra-refined penthouses and villas, this development comes as a joint venture between Select Group and Emirates Strategic Investments Company, while being operated by Six Senses. Another sensational release for this year is St. Regis The Residences by Emaar in the Opera District, Downtown Dubai, features bespoke serviced apartments with privileged access to premium amenities of the St. Regis brand.

Furthermore, upscale areas in Dubai witnessed 25% rental growth in 2021, which is the highest among 30 cities worldwide owing to national government initiatives and the influx of foreign professionals to the emirate. As stated by Paul Tolstevin, Head of Savills World Research, Dubai alongside Miami and Lisbon, has largely benefitted from the demand for spacious properties and the flexibility of remote working.

Swapni Pillai, Associate Director of Savills Middle East Research commented on the tremendous value spike in Dubai:

The stellar performance of Dubai in our research findings is proof of the successful efforts of the government in making the emirate a destination of choice during the pandemic. Prime capital values in Dubai are still undervalued compared to its global counterparts which will set the stage for further price appreciation in 2022, albeit at a more sustainable level.