The allure of Dubai as a premier destination for living, working, and leisure activities is fueling a surge in its property market, drawing in a significant number of investors and buyers.
As per the latest insights from Knight Frank, Dubai’s real estate market is witnessing its third cycle of growth in the freehold residential sector, marking a nearly four-year period of consistent demand and rising prices.
The third quarter of 2023 saw a notable 5% increase in property prices, continuing a trend of growth for the 11th consecutive quarter. Compared to the same period last year, apartment and villa prices have escalated by 19% and 18% respectively. However, it’s important to note that the market is still 8.1% below its peak in 2014.
During Q3 2023, apartment prices experienced a 5.1% rise, reaching AED 1,300 per square foot, while villa prices grew by 4.5%, averaging at AED 1,580 per square foot.
Knight Frank’s recent ‘Rise of the Super Wealth Hub Series: Dubai edition’ report positions Dubai on par with other major global cities, citing its development into a ‘live, work, play’ hub. The report assesses Dubai’s attractiveness across six areas: Urban Prosperity, Governance and Talent, Legal Framework, Enterprise Excellence, Lifestyle, and Opulence. These factors contribute to a unique scoring model that evaluates cities on a scale of 0 to 1 based on their live, work, and play capabilities.
Dubai has scored impressively in the ‘Work’ and ‘Live’ categories, reflecting its conducive business environment, ease of capital flow, and financial market competitiveness. These factors have solidified Dubai’s status as a business and investment-friendly city. The ‘Live’ aspect is further enhanced by the city’s high quality of life, as indicated by scores in average travel times and purchasing power parity.
Faisal Durrani, Partner – Head of Research, MENA at Knight Frank, highlighted that Dubai’s lifestyle appeal has significantly grown post-pandemic, boosting demand for real estate. He further explains that this demand has led to a robust luxury home market, a nearly saturated Grade A office space market, and a hospitality sector with one of the highest occupancy rates globally.
Additionally, Dubai’s economic prospects have been bolstered by the introduction of the Dubai Economic Agenda, or D33. This ambitious plan aims to double the city’s foreign trade and position it as a leading financial centre by 2033. Durrani notes the importance of sentiment in emerging markets, especially in relation to economic and real estate growth.
To accommodate the projected population increase to 7.8 million by 2040, Dubai will require an additional 70,000 homes annually. Current forecasts indicate an annual completion of just 13,000 homes over the next six years, suggesting a continued demand-supply imbalance that could further drive up home values.
The report from Knight Frank also delves into Dubai’s office market, highlighting its growing demand, increasing rents, and decreasing vacancy rates. The city has become a magnet for international businesses, particularly in sectors like banking, fintech, media, and telecommunications.
In terms of living standards, Dubai’s rapid development over the past five decades has significantly elevated its status as a global commerce hub, resulting in a higher cost of living. Despite this, the demand for luxury homes remains robust, with Dubai becoming a favoured destination for second-home buyers.
Dubai’s international appeal has transformed since opening its residential property market to global buyers in 2002. Factors such as market maturity, world-class amenities, and strategic location have played a pivotal role in this transformation.
The city’s commitment to sustainability is evident in projects like ICD Brookfield Place, Sustainable City, and Expo City. These serve as benchmarks for sustainable development in the Middle East. The UAE government’s implementation of stringent green and sustainable building standards further underscores this commitment.
Looking ahead to 2024, Knight Frank anticipates a 3.5% increase in mainstream property values, with the prime residential market expected to see stronger growth. This growth is being driven by high demand from key markets such as China, the UK, and India, making Dubai’s prime residential market one of the fastest-growing globally.
Original article reference: Arabian Business.