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Dubai’s luxury home price growth set to ease in 2024

Home, Dubai’s luxury property market will cool down in 2024 but outperform global peers.

Dubai, the emirate known for its skyscrapers and lavish lifestyle, is set to see a moderation in its prime residential property prices this year after a stellar performance in 2023. However, according to a leading real estate consultancy, it will remain one of the most attractive and competitive markets in the world.

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Savills, in its latest report on Dubai Real Estate Predictions 2024, said that the growth in capital values of luxury properties in Dubai is expected to range between 4% and 5.9% in 2024, compared to a whopping 17.4% in 2023. This reflects a return to more normal market conditions and the impact of the COVID-19 pandemic on the global economy and travel.

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Despite the slowdown, Dubai will still be the second-best performer among the 28 global cities tracked by Savills, after Sydney, projected to grow 8% to 9.9% in 2024. Both towns will benefit from the influx of high-net-worth individuals (HNWIs) looking for safe and stable destinations to invest and live in.

“Dubai has emerged as a preferred haven for investors and end-users amidst geopolitical and economic headwinds in other global investment markets. The emirate offers world-class infrastructure, safety, security, and a diverse and cosmopolitan lifestyle,” said Andrew Cummings, Head of Residential Agency at Savills Middle East.

He added that the UAE’s visa reforms, which include lower spending requirements to obtain a ten-year golden visa, have also boosted the appeal of Dubai’s property market, especially for foreign buyers.

“Dubai is rapidly cementing its status as the number one lifestyle destination in the region and beyond. The supply-demand dynamics are also favorable, as there is an undersupply of ready property, coupled with the development of new high-quality projects, driving up the prices,” he said.

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According to Savills, Dubai’s demand for luxury properties is driven by a mix of buyers, including locals, expatriates, and foreigners. The most popular locations for apartment purchases are Dubai Marina, Downtown Dubai, and Jumeirah Village Circle. At the same time, Dubai Hills Estate and Arabian Ranches are the top choices for villas and townhouses.

On the rental side, the demand is mainly from expatriates, who prefer apartments over villas and townhouses. The rental hotspots include Dubai Marina for apartments and Dubai Hills Estate for villas and townhouses.

While Dubai’s luxury property market is expected to shine in 2024, other major markets such as London, Paris, New York, and Hong Kong are forecast to see declines in their capital values, ranging from -0.1% to -4.9%. This is due to various factors, such as political uncertainty, social unrest, oversupply, and affordability issues.

However, regarding prices per square foot, Dubai still offers a great value proposition compared to its global peers. As of December 2023, the average prime capital value in Dubai was $750 per square foot, while in Hong Kong it was $3,970, in New York it was $2,560, in Paris it was $1,550, and in London it was $1,920.

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Savills said that Dubai’s real estate market performance in 2023 was robust across all sectors, fueled by the recovery from the pandemic, the successful hosting of Expo 2020, and the positive economic and demographic indicators. The population of Dubai reached 3.6 million by June 2023, marking a 1.4% increase from the previous year. The tourist arrivals increased by 19.9% from January to November 2023, reaching 15.4 million. Moreover, the GDP for the first half of 2023 grew by 3.2%, totaling AED 223.8 billion.

The report also forecasted the changes in the hospitality, office, retail, industrial, and logistics sectors in 2024, highlighting the opportunities and challenges for each segment.

Savills concluded that Dubai’s real estate market is well-positioned to capitalize on the positive momentum from 2023 and to continue attracting investors and end-users worldwide, seeking quality, value, and stability in a dynamic and diverse market.

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