Dubai, the vibrant cosmopolitan city known for its architectural marvels and luxurious lifestyle, continues to attract the attention of global high-net-worth individuals (HNWIs). A recent report by global property consultancy Knight Frank reveals that HNWIs plan to invest a staggering $2.5 billion in Dubai's property market this year. With a growing appetite for exclusive real estate, these discerning investors are drawn to Dubai's unmatched allure and promising returns. This article delves into the key findings of the report, shedding light on the factors driving this surge in investment and highlighting the preferred areas and property types favored by HNWIs.
Dubai: A Magnet for Global Wealth
Knight Frank's report surveyed 183 HNWIs globally, each with a net worth exceeding $3 million (excluding their primary residence). Collectively, this group owns 851 homes worldwide and boasts a combined net worth of $3.2 billion. Faisal Durrani, Partner and Head of Middle East Research at Knight Frank, describes Dubai as a city that has reached a tipping point, emerging as a magnet for the world's wealthy. The city's outstanding transport infrastructure, unrivaled global connectivity, and forward-thinking leadership have propelled Dubai's reputation and status on a global scale. As a result, international HNWIs are increasingly looking to own second homes or even relocate to the emirate.
Dubai's Resilient Property Market
Despite the challenges posed by the COVID-19 pandemic, Dubai's property market has showcased resilience and robust growth. The combination of government initiatives, higher oil prices, and measures to support the economy has fueled the market's recovery. Property transactions in Dubai and Abu Dhabi witnessed a surge in demand, with Dubai's market performance, in particular, being described as "exceptional" by Crown Prince Sheikh Hamdan bin Mohammed. In 2022, the value of property deals reached a new high of Dh528 billion, marking a significant 76.5% annual increase. The positive momentum continued into the first quarter of 2023, with a total transaction value of Dh157 billion—an 80% annual rise.
Preferred Investment Reasons and Locations
The report reveals that expanding property portfolios emerged as the primary motivation for HNWIs with a net worth exceeding $10 million to invest in Dubai. Forty-seven percent of surveyed HNWIs cited Dubai's high-quality transport infrastructure as the top reason for considering the emirate as an attractive real estate investment destination. Other factors include Dubai's status as a global tourism center, its successful recovery from the pandemic, and the wide availability of projects. Downtown Dubai, The Palm Jumeirah, and Sohba Reserve emerged as the most preferred areas for wealthy investors seeking property in the emirate. The Palm and Emirates Hills, on the other hand, garnered favor from investors from the UK, Europe, and North America. For East Asian investors, Downtown Dubai and Business Bay took the lead.
Property Types and Shift in Preferences
The report highlights that apartments are the favored residential property type among global HNWIs, with 64% expressing a preference for them. However, among those with a net worth exceeding $10 million, 53% lean toward purchasing villas in Dubai. Notably, there has been a notable shift in preference from off-plan purchases to recently built or completed homes. Over half (53%) of HNWI buyers are now focusing on acquiring newly constructed properties, rising to 71% among HNWIs from East Asia. These discerning buyers are willing to pay record prices for beachfront villas, with customization becoming an integral part of their investment strategy.
The Rising Demand and Price Surge
Dubai's property market has witnessed a surge in demand from ultra-high-net-worth individuals, further driving up the prices of premium homes. The report reveals that average prices for homes above $10 million reached Dh7,235 per square foot in the first quarter of 2023, representing a 16% increase compared to 2022. The allure of owning exclusive beachfront villas in locations like Palm Jumeirah has captivated the global elite, who are willing to invest substantial sums not only in the purchase but also in customizing these luxury residences. Dubai's stable real estate market, coupled with its world-class infrastructure and proactive government policies, continues to attract investors from various jurisdictions, leading to wealth creation and job opportunities.
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