A. SREENIVASA REDDY (ABU DHABI)
The inventory of luxury homes in Dubai is falling rapidly following excessive demand from high net worth individuals (HNWIs), according to latest data provided by Knight Frank, a global real estate consultancy.
The number of homes available for sale in Dubai’s prime residential markets – Emirates Hills, Jumeirah Bay Island, Jumeirah Islands, and The Palm Jumeirah – has fallen by 47% over the last 12 months to 2,851 properties, says the report.
“Dubai’s global allure continues to captivate the super-rich, leading to a supply shortage in the city’s luxury property market,” commented Faisal Durrani, Head of Research for Knight Frank MENA. “This surge in demand has resulted in a 47% decrease in available homes for sale within these prime locations over the last 12 months.”
Due to ballooning demand, prices in prime locations are also increasing. According to Knight Frank report, average transacted prices in Dubai’s most affluent neighbourhoods stood at Dh3,706 per square foot during H1 2024, up 7% on H1 2023.
With 853 home sales, the Palm Jumeirah once again accounted for the lion’s share of prime deals in H1, at 89.3%, followed by Jumeirah Islands (5.03%), Jumeirah Bay Island (3.56%), and Emirates Hills (1.05%).
Dubai has solidified its position as the world leader in $10 million+ property sales. Following a record-breaking 431 sales in 2023, the city has witnessed an additional 190 sales exceeding $10 million during the first half of 2024, the Knight Frank report said.
“A remarkable aspect of Dubai’s $10 million+ market growth is its resilience against the shrinking pool of available luxury homes,” observes Durrani. “Listings in this price bracket have dropped by a substantial 65.5% over the past year, to just 460 properties. This trend signifies a shift towards ‘buy-to-hold’ investors, with international HNWIs primarily focused on acquiring properties for personal use rather than flipping them for profit, as was prevalent in previous market cycles.”
The total value of $10 million+ homes sold during H1 totalled $3.2 billion, and builds on the $7.7 billion figure recorded during 2023.
The Palm Jumeirah registered 21 deals worth over $10 million, totalling $365 million, and dominated the luxury homes market during Q2, accounting for 26% of sales by total value. Emirates Hills (10%) and District One (7.8%) followed in second and third place, respectively.
The Palm Jumeirah (21) also led the pack in terms of the total number of luxury homes sold, followed by Dubai Islands (9) and Emirates Hills (8).
Even further up the price spectrum, demand remains extremely robust. The number of $25 million plus home sales grew by 25% in the last three months alone, taking the tally for the first half of 2024 to 27, says the report.
Will McKintosh, Regional Partner and Head of Residential, MENA, said: “What is remarkable about this figure is that the number of $25 million plus home sales between 2015 and 2021 averaged less than three a year.”
Regarding a specific question from Aletihad over the outlook for the next half of this year, Durrani said: “Our forecast is for prime price growth of 5% during 2024, building on the 44.4% increase in 2022 and the 16.3% uplift last year. At this stage of the property market cycle, you would expect price growth to moderate. This is both healthy and normal, as well as a sign of a maturing market, which makes it more attractive to international buyers. Nonetheless, the 5% growth forecast for Dubai this year still leaves the city as the third fastest growing prime residential market in the world, behind Auckland (10%) and Mumbai (5.5%).”
Referring to pessimism in some sections of the market about the durability the Dubai property boom, Durrani said: “There is nothing to suggest we are approaching a cliff-edge moment for price growth. The market fundamentals remain robust, particularly when you consider the supply-demand imbalance.”
Elaborating on the issue, Durrani said: “While Dubai expects to deliver 261,000 new units over the next six years (exceeding the historical average), projections suggest a need for at least 70,000 homes per year to accommodate population growth. This ongoing supply shortage is expected to continue supporting price increases.”