The growing number of high-net-worth individuals (HNWIs) relocating to Dubai has driven the cost of premium homes in the emirate to record levels, a real estate firm said on Friday.
Sale prices of super-luxury residences in the emirate went up to as much as $4,000 (AED14,692) per square foot in 2023, according to the 2024 Sotheby’s International Realty Luxury Outlook Report, released on Friday.
The price per square foot, which is roughly equivalent to a monthly rent for a furnished flat in Dubai, marks the consecutive year-over-year price increases since 2020, according to Chris Whitehead, Managing Partner, Dubai Sotheby’s International Realty.
A quick look at real estate listings in Dubai would show that a furnished one-bed unit at a premium community in Dubai could cost more than AED14,000 a month as of January 12, 2024, which is about the same price per square foot for a luxury residence on sale.
However, Sotheby’s noted that sale prices in the emirate are still lower than in other markets like the UK, and property owners in Dubai are also not required to pay real estate taxes.
Influx of millionaires
For the past two or three years after the COVID-19 lockdowns, high-net-worth buyers from Europe, including the UK, France and Germany, have been flocking to Dubai to relocate, according to Whitehead.
These buyers were attracted by the prospect of not having to pay real estate tax, he said.
Last year, Sotheby’s sold a penthouse planned at Dubai’s Marsa Al-Arab Hotel for $114 million and an apartment at the Bulgari Lighthouse that cost $112 million.
The high demand has led to “skyrocketing” prices. Whitehead expects the trend to continue, citing that the recent political unrest in some Middle Eastern countries is also driving even more buyers to Dubai.
“Buyers are coming for the property quality, the value for the money, the cleanliness and the retail,” Whitehead said.
“Dubai was always transient; people came to make money and then left to go back to where they came from. But now, many are moving for the lifestyle and staying.”
Overall, residential property prices in Dubai went up by 16.9% on average in the first two quarters of last year, according to CBRE, with apartment prices posting a 17.2% increase and villa prices rising by 15.1%.
Despite the skyrocketing prices, buyers are still finding relative deals in Dubai, which remains undervalued.
“Buyers are paying two to three times the price per square foot in London, and Dubai is tax-free. The ultra-high-net-worth individuals of Dubai spend the winter here and the summer in Europe,” Whitehead noted.
Dubai has been attracting thousands of millionaires from around the world in recent years.
In 2022, at least 5,200 HNWIs relocated to the UAE, according to Henley & Partners, and last year, the country was forecast to receive a net inflow of another 4,500 HNWIs.
(Writing by Cleofe Maceda; editing by Seban Scaria)