Dubai: Ultra-luxury property market heavily undersupplied as supply is absorbed, says expert
The emirate is a magnet for high net-worth individuals for several reasons, including safety, security, and low taxes.
Dubai’s ultra-luxury property market is heavily undersupplied, as most of the supply is absorbed at an unprecedented level, with affluent buyers flocking to the emirate to cash in on the attractive deals for high-end properties.
As a result of short supply, industry executives suggest that there will be a smaller number of transactions for ultra-high properties in 2023.
“This market is the most in-demand and the most undersupplied. Since the onset of Covid-19, this market has thrived and most of the market supply was absorbed by end users in this category. Inevitably, this could lead to lower transactions in the secondary market in 2023, as most of those who bought in the past three years have settled in, and have no intention of reselling, even though prices have soared,” said Abdullah Alajaji, CEO and founder, Driven Properties.
Dubai is a magnet for ultra-high net-worth individuals for many reasons including safety, security, and low taxes. Moreover, savvy investors are attracted to the quality of finishing and materials that Dubai luxury developments have as they use the top brands for design elements.
In 2022, the Henley Global Citizens Report projected the UAE attracted 4,000 millionaires, the highest in the world.
Asa result, the emirate’s real estate sector has seen some record deals, of late, such as the most expensive ultra-luxury apartment sold for Dh410 million, and a Dh600-million villa sold on Palm Jumeirah – the costliest property sold ever in the emirate.
Petri Mannila, sales director of Penthouse.ae, said interest from millionaires mainly from Europe and the USA is fuelling demand, even as the price of opulent properties in Dubai continues to rise sharply.
“I have never seen this much interest from HNWIs interested in moving to Dubai to either live here or for business. Demand for Dubai’s uber-luxury residences has reached unprecedented levels as the political and economic situation in affluent western markets, Russia and Asia, continue to be uncertain, encouraging wealthy individuals to turn to safe havens where they can protect and grow their investments,” said Mannila.
Set up by Metropolitan Premium Properties, Penthouse.ae represent licensed developers, sellers and buyers in Dubai’s iconic locations, with the biggest deal in its books last year being the Dh80.35 million sale of a unit at the Bulgari Residences.
“This is really a brand new segment in Dubai’s real estate market, given the fact that two years ago, such deals were only a handful, almost non-existent – yet today, we are witnessing a market that this year may exceed Dh35 billion in transaction value,” added Mannila.
Abdullah Alajaji of Driven Properties said developers are now racing to cater to the unprecedented demand in this market so as to solve the supply issue.
“We believe that demand will continue to increase within the ultra-high-end market, albeit [the fact that] most of the new demand will have to be catered through new schemes in the primary market,” he added.