Dubai and luxury are firm friends. Whether it’s a luxury car, hotel stay, retail experience or property investment, it’s frequently the adjective of choice, and one that is bandied about with plenty of marketing-led enthusiasm.
When we talk about luxury homes and surging demand, however, it’s important to pinpoint an appropriate definition of luxury. In our H1 2022 Market Report we talked about the 17 per cent year-on-year increase in number of units sold and the incredible rise in total buyer leads, which aptly reflects ongoing demand for ‘massive luxury properties’. Yes, size does matter, but there are a number of other intrinsic factors that come together to deserve a luxury label – and price tag.
Historically, price has been the definitive marker as opposed to square footage and aesthetics. Broadly speaking, luxury accounts for the top 15 per cent of the market, and we bracket it between Dh5-20 million, although at the ‘lower’ end some people may consider it lowballing in a market where Dh99 million isn’t a far-fetched fantasy. In perennially in-demand cities like London and New York, Dh20 million homes are the expectation rather than the exception for a certain demographic, while the average luxury focused investor can secure a decent enough property for Dh5 million, but Dubai can offer so much more bang for their buck.
The city is home to a decent swathe of luxury real estate despite the fact that current supply has been swamped by demand for high-end villa living in particular. We reported that for H1 2022 villa sales, the average price per square foot increased by 28%, for luxury transactions. What this clearly highlighted was a renewed personal desire for more space, including outdoor areas, after being cooped up during lockdown angling for top billing on the purchase wish-list – and this is where luxury property also delivers. Palm Jumeirah, Emirates Hills, Mohammad bin Rashid City, Arabian Ranches, Meadows, Bluewaters and a clutch of exciting contemporary builds tucked away along Jumeirah’s leafy side streets all tick the luxury price point and generous square footage box.
In the first half of this year, the Dubai property market saw transaction levels for both villas and apartments at their highest for over a decade as a perfect storm of accelerated ‘Covid effect’ purchase intent, improved economic sentiment and confidence in the emirate’s property market, drove residential demand. Dubai isn’t the only city reporting similar price per square foot growth and unprecedented demand for luxury homes, with other global gateway cities such as London, Zurich, Shanghai and Singapore also on the ascendant.
Where Dubai excels is in delivering on lifestyle and this pairs perfectly with the villa offering, which is also largely driven by location, includes the desire for privacy, and is powered by access to fabulous quality-led design. Architecturally, and aesthetically, luxury homes throughout the city’s most sought-after developments like Palm Jumeirah, and single builds have an added uniqueness not always seen in other markets, so investors have the opportunity to buy a fantastic one-of-a-kind home.
Covid-19 has undoubtedly been a catalyst for change, as there has been a mindset shift, whereby emotions have entered the fray, with family safety, security and happiness pushed up the personal values ladder, prompting intent to buy a better home for a better life.
Over the last 18 months, the serious amounts of money people are paying for luxury properties has risen to a level that we simply haven’t seen before. There has also been a quantum shift in terms of the buyer demographic. Prior to the pandemic, super wealthy GCC nationals were our primary luxury market, but now we are seeing a lot of Western European buyers who didn’t previously have Dubai on their luxury radar.
The big question is whether this burgeoning luxury demand is a flash in the pan or a long-term trend? Personally. I think it’s the latter. The world’s ultra-high-net-worth individuals who aren’t already here, are beginning to recognise the unique benefits that Dubai and the UAE offer as a residential base, from the obvious ones such as zero income tax and safety to ease of business set-up and global connectivity. As I said at the start, a luxury home is so much more than a price tag.
When companies, banks, investors, cities, and regions make net-zero commitments, we must be able to trust them
Is it unethical? Sure, it is — unless you believe in transparency and inform both parties about the matter and they give you the go-ahead (which is unlikely in most cases)