World’s ultra-rich to spend $4.4bn to buy property in Dubai

Global high-net-worth individuals (HNWIs) are expected to spend $4.4 billion in buying Dubai property this year, up 76 per cent compared to last year, as demand for luxury homes from the world’s super-rich continues to remain strong in the emirate amid appreciation of prices. GCC-based residents HNWIs are projected to spend $3.1 million to buy a house in Dubai while the global ultra-rich will allocate $36.5 million on average on property deals, according to a new report by the global property consultancy Knight Frank. Knight Frank interviewed 317 wealthy people as part of the survey, with an average net worth of $20 million globally and $8 million in the Gulf region. “The appetite for investing in Dubai is still exceptionally high,” said Faisal Durrani, partner and head of Middle East research at Knight Frank. “The level of interest to invest in Dubai rises with the level of personal wealth growing, from 28 per cent for those with $2 to $5 million, topping out at 70 per cent among those worth more than $15 million.” Fifty-one per cent of respondents with a net worth between $10 to $15 million said they are “very interested” in purchasing a property in Dubai, while 78 per cent of respondents in the category of more than $15 million net worth were also keen to a home in the emirate. Top neighbourhoods to purchase in include Dubai Marina, Downtown Dubai, Business Bay, Dubai South/Expo City, Dubai Canal, Dubai Hills Estate, Palm Jumeirah and Jumeirah Bay Island and others. Ultra-rich buyers plan to buy a property in Dubai for investment or capital gains purposes as well as to have a second home or holiday home or to rent out to tenants, the survey results show. They are also investing as part of their strategy to diversify their portfolio. The UAE property market has been booming in recent years on the back of government initiatives such as residency permits for retired and remote workers and the expansion of the 10-year golden visa programme. Overall growth in the UAE’s economy due to economic diversification efforts is also supporting the property market. Dubai's luxury prime market hit a record last year as sales of $10 million-plus homes nearly doubled to $7.6 billion, performing better than London and New York, Knight Frank said in a report earlier this year. Prices of $10 million-plus homes in Dubai also grew at one of the fastest rates globally at 26 per cent last year, as overseas demand for prime residences in the emirate continues unabated, according to Knight Frank. Prathyusha Gurrapu, head of research and consulting at Cushman & Wakefield Core said the growing demand for ultra-prime properties in Dubai “is fuelled by the influx of high-net-worth individuals to the emirate from other global locations and an increase in the number of billionaires residing in the UAE”. “In 2022, Dubai ranked as the top destination for HNWI migration, and in 2023, it ranked second," she said, citing Henley's Private Wealth Migration report. "This year, the global migration of HNWIs is expected to grow by 5 per cent compared to 2023, with 128,000 HNWI migrants, and a significant portion is likely to move to Dubai. Besides migration trends, there is a steady increase in investors purchasing ultra-prime properties as second homes." Twenty five per cent of surveyed ultra-rich, with worth more than $20 million net worth, are planning to spend $60 to $80 million on a single acquisition in Dubai, while 18 per cent are committed to spending $40 to $60 million, according to the latest Knight Frank survey results. The report also showed other interesting aspects including the inclination towards buying a ready home compared to off-plan properties. Fifty-six per cent of respondents said they want to purchase something completed or new build property and just 14 per cent are interested in the offline market. “That has interesting connotations for a market that saw so much new off-product launches in the last 12 to 18 months. If we think about that 56 per cent … that's again hinting at the fact that people don't want to wait to take possession of a property, they want to move in now,” Mr Durrani said. Meanwhile, property developers are unveiling new projects as demand continues to grow. Emaar Properties, Dubai's largest listed developer, launched a new development worth Dh55 billion ($15 billion) near the Al Maktoum International Airport. The Heights Country Club & Wellness will have town houses and semi-attached villas with amenities including a wellness centre, parks, ponds, greenways, among others, the company said on Tuesday. “The announcement for the construction of the new airport for $35 billion is going to be a spark for development in that area to create a new aerotropolis. Most of the plots around the airport are already sold,” said Mr Durrani. Demand for existing ready properties worth over Dh30 million has doubled since 2022 and has remained stable since last year, Haider Tuaima, director and head of real estate research at ValuStrat told The National. “New supply in the form of off-plan sales has increased up to fivefold since 2022 and is 30 per cent higher than last year. However, this segment still represents less than 1 per cent of overall home sales in Dubai.” Prices of prime residential properties, valued at $10 million rose 18.2 per cent year-on-year in Dubai in the first quarter and overall prices increased by 20 per cent, according to Knight Frank. In 2024, overall residential prices in Dubai are projected to rise by 3.5 per cent and prime properties by 5 per cent, Knight Frank said. “All the individual KPIs that we are monitoring on supply on demand, particularly from international buyers, does not point to any slowdown (in the property market) on the horizon,” Mr Durrani said. Meanwhile, in Abu Dhabi, global HNWIs are expected to spend a total of $408 million to purchase a property this year, with an average budget of $3.4 million for global HNWI and $900,000 for GCC-based wealthy residents. Fifty-seven per cent of respondents, with a net worth of more than $15 million are keen to buy a property in Abu Dhabi as the emirate continues to launch new projects amid higher demand from buyers. Aldar, Abu Dhabi’s biggest property developer has announced the launch of new developments in Abu Dhabi this year including Nouran Living at Saadiyat Island . It also sold the emirate’s most expensive apartment for Dh137 million amid higher demand for luxury property in the emirate. Property sales as well as prices are also on an upward trajectory in Abu Dhabi. The UAE's capital recorded an increase in sales transactions during the first quarter of 2024, with 2,660 deals for apartments and villas, marking a 17 per cent rise compared to the same period last year, according to Asteco. The average apartment sales prices across the market remained relatively unchanged during the period, while average villa sales prices rose between 10 per cent and 15 per cent, it said.