In a world increasingly defined by its urban centers, Dubai has cemented its position as a premier destination for high-net-worth individuals (HNWIs) seeking real estate investments. Knight Frank’s recent Destination Dubai report reveals an astounding $4.4 billion earmarked for investment in Dubai’s residential market by the global elite, 76 percent up on 2023.
In our second annual 2024 Destination Dubai report, Knight Frank surveyed 317 HNWIs, including 217 international and 100 GCC-based expat HNWIs, to understand their investment attitudes and aspirations when it comes to property in Dubai.
Our survey results highlight intriguing details about the budgets and preferences of these affluent buyers. On average, GCC-based HNWI expats plan to spend $3.1 million on a home in Dubai, while global HNWIs have an average budget of $36.5 million, climbing to $58.5 million for UHNWIs, i.e., those worth over $20 million.
Why Dubai?
Dubai’s rise as a premier investment destination is no accident. The city’s strategic location makes it an attractive hub for international business and travel, and indeed Dubai International Airport has been the busiest international airport for 10 years running and now is the world’s second busiest airport overall when factoring for both domestic and international travel. Near-constant investments in infrastructure and connectivity provide a robust foundation for economic growth and high living standards.
Overall, global HNWIs cite Dubai’s high-quality infrastructure as the top factor that makes the emirate an attractive place for real estate investment. In fact, the UAE’s infrastructure quality was ranked fourth globally in the World Economic Forum’s 2023 competitiveness report.
Another significant aspect is Dubai’s status as a premier tourist destination. With 17.1 million arrivals in 2023, Dubai ranks as the third most visited city globally, following London and Istanbul. This influx of tourists not only boosts the economy, but also underscores the city’s vibrant, cosmopolitan appeal.
The rise of destination communities
Dubai’s residential market has evolved to cater to its international expat community through the development of ‘destination communities’. These communities are designed to meet the unique demands of its largely expat dominated population, offering an array of exclusive features. While amenities like quality schools, shopping malls, golf courses and sport facilities have become the new normal, there has been a growing demand for homes with access to green spaces and wellbeing centers.
In fact, 88 percent of global HNWIs view access to parks and greenery as an essential ‘must have’ when considering property options in the city. Proximity to a hospital or healthcare center has been ranked the second most important factor, reflecting a global shift towards personal well-being. It will be interesting to observe how this translates into a residential development as the city continues to evolve. For now, Aldar’s Athlon and Emaar’s Heights at Dubai South are blazing a trail in this direction by developing residential communities centred on personal well-being.
Access to the beach has become the third biggest selection criteria. This should come as no surprise though, given that Dubai is synonymous with beach-front living and now boasts the 8th best beach in the world – JBR beach – according to Beach Atlas 2024.
Jumeirah Islands: The new prime spot
It is exactly this demand for waterfront properties and green spaces that has driven Jumeirah Islands to join the ranks of Dubai’s prime residential neighbourhoods, as it provides both. The race for space during the pandemic boosted villa prices in Dubai, and Jumeirah Islands benefited from this trend. In Q1 2024, it joined Emirates Hills, Jumeirah Bay Island and Palm Jumeirah on this exclusive list.
To qualify as prime, a neighbourhood must have at least 10 percent of all deals by total value at over AED10 million for three consecutive years.
Over the last 12 months sales prices in Jumeirah Islands increased by 67.5 percent. At the same time the number of homes available for sale in this community has dropped by 28 percent. This decline reflects that buyers are purchasing these properties to use as their primary or holiday homes. As a result, once sold, these properties are no longer available on the market, indicating the maturity and stability of this location.
Affordable luxury
Despite the soaring prices, Dubai remains one of the most affordable luxury real estate markets globally. For instance, $1 million secures approximately 980 square feet of prime residential space in Dubai, compared to 366 square feet in New York, 355 square feet in London, and just 172 square feet in Monaco. This affordability, combined with the city’s high standard of living and safety, makes it an attractive destination for HNWIs.
Future prospects
Dubai is no longer an emerging market. It has firmly emerged. The growing list of prime residential neighbourhoods is the evidence to its maturity. Buyers are not only paying record prices for homes but are also investing similar amounts in refurbishments. This trend indicates a longer-term ‘buy-to-hold’ or ‘buy-to-live’ mindset.
We are now monitoring Tilal Al Ghaf, Jumeirah Golf Estates, Al Barari and Blue Waters. It is only a matter of time before one or several of these communities ascends to prime status.
By the end of 2024, we expect the prime property values to increase by 5 percent, positioning Dubai as the third fastest-growing prime residential market globally behind Auckland (10 percent) and Mumbai (5.5 percent). While it appears to be a decline from the astonishing 44.4 percent growth in 2022, and the 16.3 percent rise last year, it reflects the normalisation of the extraordinary growth experienced so far in this property cycle, which has just entered its fifth year of growth.
Conclusion
The global demand for Dubai real estate among HNWIs underscores the city’s appeal as a premier investment destination. With its exceptional infrastructure, its strategic location and evolving residential offerings, Dubai continues to attract the global elite, promising a vibrant future for its real estate sector. As new prime neighbourhoods emerge and existing ones thrive, Dubai’s real estate market is set to remain a magnet for global capital and luxury living.
Faisal Durrani is Partner – Head of Research, MENA, and Shehzad Jamal is Partner – Strategy & Consulting, MEA at Knight Frank.
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