Most importantly, this is not just because developers have been able to achieve stable - and higher - selling price levels in emerging offplan locations such as Dubai Hills and Dubai Creek Harbour, which have become quite popular with buyers in the last two quarters.
The real gains have been led by a return in demand for those old investor favourites - the Palm and Downtown. There was a Dh73 million transaction recently for a penthouse on the Palm, for a ongoing project from Omniyat. But even if one were to remove that deal, there was still a lot happening.
“The increase in the value of transactions are being driven by the Palm and Business Bay at the ready property level, and in Downtown, Meydan and Dubai Hills for offplan,” said Sameer Lakhani, Managing Director at Global Capital Partners, a consultancy.
“It has also been helped by the slowdown in new offplan launches during the first five months, giving a further impetus to allocate investments to existing projects, ready and offplan. The Palm and Downtown are clearly the dominant destinations attracting investments right now.”
Developer sources say they have been caught off guard by the sudden rush in buyer interest for prime/luxury homes over recent months. All through last year and more, developers had been trying to shift sub Dh1 million to Dh1.5 million units. Even those based in upmarket locations had these “affordable luxury” prices tagged on to them.
Is the recent interest for prime properties in Dubai just a case of the market and its buyers revisiting their options? It may be no coincidence that Dubai’s luxury homes are rated as among the most affordable compared with their peers in London, Hong Kong or Singapore.
Knight Frank in an update early this week reckoned that the average price for a luxury home in Dubai is now at the $625 per square foot level, while in London that would $4,000 psf and well above, while New York’s would be in the $2,000 psf range. In its last peak year, which was 2014, luxury homes in Dubai were averaging $1,500-$2,500 a square foot. In London’s case, the Knight Frank report says: “New-build developments are helping to raise the bar in terms of prices achieved.”
How quickly are Dubai’s developers likely to meet the appetite with new and higher priced launches? Meraas recently launched a townhouse development called “Sur La Mer”. It’s one of the few freehold locations in Jumeirah 1, a traditional favourite of the city’s wealthy.
“Prices start from Dh4.3 million with an expected handover July 2021,” said Michelle Liddiard, Luxury Sales Specialist at the brokerage firm Luxhabitat. “I expect to see launches in both “Downtown Jumeira”, a new mega project by Dubai Holding, as well as at “Mina Rashid” by Emaar further on into the year.
“The higher end of Dubai’s real estate market remains rather resilient. Transactions of Dh10 million plus on the Palm have doubled this year compared to last year. Not only have transactions increased, the price per square foot has only dropped on average by around Dh50, which is nothing. The latest villa to sell was for a whopping Dh3,427 a square foot, which shows there is still demand for special properties.”
LUXURY PROPERTIES ARE STILL AWAITING THE VISA BOOST
Buy a Dh5 million or over home in Dubai and get a multi-year resident visa was one of many reforms the local government announced to spur investments and the wider economy. But investors are yet to make a decisive move on the investment-linked property purchase, though industry sources it’s time will come.
“We have seen an increase in enquiries for info about the residency investment visas,” said Michelle Liddiard of Luxhabitat. “It’s still too early to see if this news has created a rise in sales transactions; but in time, it is definitely a positive. Once everything is set in stone, I believe that it will boost the property market.”
But even without that visa-led impetus, sales of properties between Dh5 million to Dh60 million have totalled 462 transactions compared to 2018’s 380 deals for the same period. “The highest increase was in the Dh10 million to Dh20 million range, where there has been an increase of business around 60 per cent,” said Liddiard.
But, interestingly, sales of plots of Dh10 million plus has dropped quite a bit this year, with estimates putting at 60 per cent.