Dubai: boom in the Persian Gulf
The boom in Dubai’s real estate market continued unabated in 2022. Despite international crises such as high inflation, rising energy prices and the Ukraine war, business is flourishing in the emirate on the Persian Gulf. About a third of Dubai City’s economic power is already based on real estate. For the United Arab Emirates (UAE), real estate has long been a key industry. The fact that 53,000 new residential units were put on the market in 2022 also shows the confidence of investors.
Sales and prices are rising
The number of real estate sales in Dubai grew by almost 60 per cent compared with 2021. The total value of these transactions in 2022 was AED 264.9 billion (€66.3 billion). This was 76.1 per cent more than in the previous year. Property prices are also climbing. For finished flats, the square foot price has increased by 13.8 per cent in the last 12 months. Flats at the development stage, the final price is even 27 per cent higher. Villas are trading almost 4 per cent higher than a year ago. Since the low point of prices in November 2020, there has been an increase in the price of properties of around 30 per cent
Spectacular real estate projects
Dubai is considered a safe haven for good investments. Buyers, tourists and expats from all over the world are attracted by superlatives, year-round bathing weather and adventurous activities. Dubai stands not only for spectacular buildings, state-of-the-art architecture and exceptional luxury hotels, but also for a mix of historical-oriental and maritime facets: the tallest building in the world (Burj Khalifa, 828 m); an island artificially raised in the sea in the shape of a palm tree (the Palm Jumeirah); and the Burj Al Arab, one of the most luxurious hotels in the world, which rises up on the coast in the shape of a sail. Dubai City Airport is one of the most important aviation hubs.
With artificial canals, islands, inland lakes and golf courses, new prime locations are being created all the time and entire residential districts are sprouting from the ground. Although Dubai positions itself as a “destination for all”, the market for absolute top properties for the ultra-rich has a special momentum right now. This includes the concepts of famous designers and exclusive fashion brands. Unusual and futuristic features characterise some new construction projects, such as private infinity pools or cinemas, custom-made furniture, beach-inspired waterscapes, simulations of tropical cloud forest and spectacular roof terraces connected by bridges. And a property purchase can also include a berth for your own yacht.
Dubai’s most expensive villa sale ever, at AED 596 million (€149 million), took place last year in Palm Jumeirah. The famous Palm Island is undoubtedly the front-runner among Dubai’s residential areas. It offers superior hotels and residential complexes, a boardwalk, beach clubs and nightlife. In Palm Jumeirah, one now pays an average of AED 2,324/sqft (€6,247/sqm) for flats and AED 3,921/sqft (€10,540/sqm) in the villa segment. The average price of a property here is AED 3.7 million (€925,000).
A new record price was also recently set for flats: AED 410 million (€102 million) for a penthouse with spacious terraces spread over three floors in the Bulgari Lighthouse (Jumeirah Bay Island).
Apartments account for the largest share of Dubai’s residential real estate market. In 2022, around 67,700 flats and 22,600 villas changed hands. The most sought-after area for flat purchases was Business Bay, with 9,302 transactions. This is a development area located in the heart of the city on an area of 436 ha with retail, shops and luxury flats. Plans call for over 200 skyscrapers. Flats in Business Bay currently cost an average of AED 1.5 million (approx. €375,000) or AED 2,100/sqft (€5,645/sqm). The exclusive Dubai Marina follows in second place (7,324 sales in 2022). The ambience here is convincing due to its futuristic flair, with many modern skyscrapers, which are primarily located on an artificial canal. The scenery is maritime, with piers, yachts, restaurants, cafés, fashion shops and waterfront promenades. Dubai Marina is also one of the largest areas where foreigners can buy full ownership. Flats here currently cost an average of AED 2.4 million (€600,000) or AED 2,700/sqft (€7,258/sqm). In third place comes Jumeirah Village Circle (5,689 flat sales in 2022). JVC is a modern and also family-friendly mega-development with parks, schools and sports facilities. Villas, flats and townhouses are on offer. The average price for flats is AED 675,000 (€168,750) or AED 1,100/sqft (€2,957/sqm). Other neighbourhoods with a high proportion of flats are the Burj Khalifa zone in downtown Dubai, Dubai Creek Harbour, Sobha Heartland and Jumeirah Lake Towers.
Most villas are currently sold in Damac Lagoons (AED 1,795,000 – approx. €449,000), Jabal Ali First (AED 2.9 million – approx. €725,000) and Dubai South (AED 1.75 million – approx. €438,000). Besides Palm Jumeirah, the best locations for high-end villas include the Dubai Hills development with average prices of AED 5.1 million (approx. €1.28 million). The highest-quality properties here are grouped on spacious (1,800 – 2,000 sqm) plots around a golf course at prices of around AED 100 million (approx. €25 million). But zones such as Arabian Ranches III, Emirates Living and The Lakes also remain good alternatives for buying villas.
Rental market with yields
Dubai’s rental market is also interesting for investors. Gross yields for flat rentals are over 7 per cent. In top zones such as Palm Jumeirah, Dubai Marina or Downton Dubai, rents are up by a whopping 30 per cent year on year. For example, the median annual rent for flats in Dubai Marina is now AED 100,000 (€25,000). For villas, rents in the most sought-after zones have risen between 15 and 55 per cent. In Palm Jumeirah, the median annual rent for a villa is now AED 700,000 (€175,000).
In view of the high interest of international buyers in Dubai’s real estate, prices are expected to continue to rise in 2023. This is especially true of the high-end segment. Rising holidaymaker numbers after the end of the Covid pandemic and the lifting of restrictions in China should further fuel the real estate market.
Are you interested in selling or buying a property in Dubai or would you like to receive further information about the service of KENSINGTON Finest Properties International – Dubai? Then get in touch with us today.
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