By Diana Nilipovscaia, CEO at MERED
In 2023, Dubai established itself as the world’s leader in the global luxury property market outpacing other international realty hotspots. Property Finder’s latest data revealed that there was US$8 billion worth of transactions, with 60% of buyers looking for apartments, in just October. The city is also the top hotspot for luxury, branded residences beating out the likes of realty cities like New York and London, according to Savills.
As we venture into 2024, the ultra-luxury real estate market, generating individual property sales as high as $420 million in Q3 of 2023 alone, is witnessing a nuanced evolution. Today’s buyers are blending emotional connections with more informed, strategic decision-making. While the impressive architecture and thought-through marketing continue to evoke strong emotional responses, the competitive nature of the market compels customers to approach their choices with a strategic lens. This trend signifies a shift where both emotional appeal and strategic considerations are pivotal in driving high-value property sales
As we look towards burgeoning cities like Dubai, the appetite for luxury residences among local buyers is expected to surge. The challenge lies not in the quality of existing developments, which already boast premium fit-outs and facilities, but in the number of such luxury developments, which are struggling to keep pace with the rapidly growing demand. This booming market presents significant opportunities for both urban, high-end residences and exclusive luxury offerings tailored to the discerning, well-traveled clientele, highlighting a need for expansion in this sector.
Let’s delve into the intricate dynamics of this market and what to expect in the upcoming year:
The Evolution of the Market
The ultra-luxury real estate market, particularly in Dubai, is showing signs of significant maturity. This evolution is a move away from the earlier trends of impulsive buying, driven by fears of currency devaluation and a rush to capitalise on Dubai’s burgeoning market. In its place, a stable and confident market has emerged, characterised by well-informed and thoughtful investment decisions. This maturity reflects the market’s long-term sustainability and increasing appeal to a global array of investors and end-users.
A recent market analysis showed that Dubai had achieved a remarkable milestone with the sale of 335 luxury properties by the end of July reporting revenues of nearly $850 million (AED3.1 billion) from upscale properties in H1. The market is focused on billionaire buyers and has sold 176 homes for $845 million in H1 2023 and 219 premium homes in the past year, indicating rising demand for ‘ultra-luxury’ properties.
Informed Buyer Behavior
Today’s ultra-luxury real estate buyers display a discerning approach to their investments. They are increasingly focusing on critical aspects such as the concept and uniqueness of the product, the reputation of the developer, and the strategic location of the property. This shift indicates a growing emphasis on the long-term value and stability of investments, reflecting a deeper understanding and commitment to making sustainable and profitable choices in the real estate domain.
Investor Focus
Investors in the ultra-luxury real estate market are prioritizing Return on Investment (ROI) and the effectiveness of their investments. Key considerations include factors like the ease of resale, rental profitability, prime location, and long-term investment potential. High-end properties attract a unique blend of investors who adopt both qualitative and quantitative approaches. These investors seek comprehensive insights, including detailed market analysis and projections of future property values. They consider aspects like architectural significance, historical price appreciation, and the use of high-quality materials and craftsmanship.
Knight Frank’s Autumn 2023 report indicates that as of Q3 of 2023, Dubai’s residential property values have risen for the 11th consecutive quarter, with an average increase of 19% in the last year. Dubai’s reputation for stability and visionary planning makes it a particularly safe and lucrative market for High-Net-Worth Individuals (HNWI) looking for secure investment opportunities. Knight Frank observes diverse buyer profiles, highlighting international investors from China as key players in Dubai’s residential market.
End-User Buyer Focus
End-user buyers in the ultra-luxury segment place a high emphasis on the quality of the home, its location, amenities, and infrastructure. For these discerning buyers, factors such as ongoing owner costs, proximity to educational institutions, and notably the privacy offered by the property play a crucial role in their decision-making process. The exclusivity and seclusion provided by these luxury properties cater to a clientele who value a private, serene living environment as much as they do the tangible luxury of their homes. MERED, understanding the nuanced needs of the ultra-luxury market, not only selects thought-trough locations for development but also prioritizes the superior quality of construction and use of premium materials in their properties, as well as ensures the inclusion of exclusive amenities that elevate the living experience.
Dubai, a city renowned for its comprehensive offerings has become an increasingly attractive destination for those seeking a lifestyle that masterfully blends opulence with functionality. This pull extends to its real estate market, where homes are designed not just with luxurious aesthetics in mind, but also with an emphasis on functional living spaces that cater to the diverse needs of every family member. Apartments are the preferred investment in Dubai’s real estate market, as evidenced by a 19.9% increase in average apartment rents in the year to date October 2023, compared to an 18.0% rise in average villa rents.
Digital Convenience in Property Purchasing
With a growing international buyer base, the imperative for digital facilitation in property transactions is becoming increasingly apparent. The demand for digital convenience in the property purchasing process and streamlining transaction processes are now essential aspects of the property acquisition journey. The visionary ‘Dubai 2040 Urban Master Plan’, which includes the forward-thinking 20-Minute City Policy, is establishing new benchmarks within the sector.
Dubai’s 2023 performance in the luxury real estate market showcases a strategic shift towards informed investment, marked by record sales and a diverse investor base. This evolution indicates market maturity and a focus on long-term value. Looking forward, Dubai is poised for sustained growth in the global real estate arena, promising continued opportunities for discerning investors and buyers.
