Almost Everyone knows that Dubai is popular for its luxury cars and luxury homes. And Currently, luxury homes are grabbing all the attention of the Multi-Millionaires and Billionaires of the world. The luxury property segment, especially the properties which are over AED 10 Million has been outperforming itself and going to All-Time Highs in the last 2 years.
In 2021, the highest number of secondary market transactions were recorded for properties over 10 million dirhams, as compared to the last decade.
But Q1 of 2022 has even surpassed Q1 of 2021 in terms of the total number of properties sold which had a worth of AED 10 million and above. In Q1 of 2021, 201 properties were sold In this category whereas in Q1 of 2022, the number of properties over 10 million dirhams each, were sold is 483. So, 140% growth in the luxury property market has been recorded in Q1 2022. It has also been reported that the Luxury Property Market is going to double its market share in Q2 2022.
Looking at the reasons why the Luxury Property market has been performing well, the major reason would be the supply and demand of such properties. The current demand has risen to a large extent because of HNWIs moving to Dubai, whereas the supply still remains limited for the luxury properties costing over AED 10 Million. This is leading to capital appreciation of luxury projects both in primary and secondary markets. There has been a 30 to 50 percent capital appreciation within one or two years of buying these luxury properties. One of the prime examples is the Royal Atlantis located on the eastern crescent of Palm Jumeirah. There were units that were sold one year back for 11 million dirhams and are currently listed in the market, and also being transacted at around 14 million to 15 million dirhams. The project has been giving a capital appreciation of approximately 30 percent in just one year and that too is in its off-plan stages.
Another community that has given high returns to the investors is Emaar Beachfront, a community that has been developed by the biggest developer in Dubai – Emaar Properties. Even though Emaar Beachfront is a community with a limited number of properties over 10 million dirhams and most of them fall under the AED10 Million category, the community has still given 80-100 percent returns in terms of capital appreciation in merely 2 to 3 years of purchase.
One of the latest launches in the community was Address – The Bay which was sold out in 15 minutes from the launch.
Why High Net Worth Individuals are Attracted to Dubai?
As mentioned earlier, the number of High Net Worth Individuals has been constantly growing in Dubai. Most of them are looking at Dubai as their primary or secondary home. According to the latest reports, It is expected that approximately 4,000 high-net-worth individuals will relocate to Dubai by the end of 2022.
Some of the primary reasons Why high net worth individuals are choosing Dubai are:-
- Dubai’s Property Market gives great competitive pricing in terms of luxury properties primarily waterfront properties and beachfront properties. The level of luxury in the luxury properties in Dubai is equal or can even be considered superior to those in the bigger nations like US and UK but the cost is really competitive and lesser than in the above-mentioned countries. This is one of the most attractive points for HNWIs because they look at the price side of the properties which is better in Dubai and the value proposition is more as well.
- Safety is a major concern for any family around the world and what is better than living in the safest country in the world? The world knows how efficiently Dubai has fought the Covid-19 battle and kept its citizens safe from this long-led battle of COVID. This is also one of the primary reasons why every stratum of people is attracted and wants to live in Dubai.
- Dubai’s Visa reforms have always been set to attract foreign investment and the recent announcement of a 10-year golden visa on just 2 million dirhams of investment in one or multiple properties in Dubai acted as a cherry on the cake. It opened more room for investment coming into Dubai.
- The 100 percent ownership of foreign businesses has also been one of the major reasons why HNWIs are attracted to and moving to Dubai. With the recent reform of granting 100% ownership to individual business owners who are not local citizens of Dubai, which was not the case earlier as a Local Citizen of Dubai was mandatory to have a part or full ownership of the business opened in Dubai, the move has attracted a lot of entrepreneurs and HNWIs to look at Dubai as a safe investment and expand their Business Operations in Dubai.
- Dubai is known to give high rental yields and capital appreciation to the investors of the Dubai Property Market. In current times of rising inflation around the world, high returns are looked at as a great hedge against inflation. Generally, most of the property segments are providing high rental yields of 6-12% annually but when it comes to the luxury segment, the properties priced at over 10 million dirhams make a perfect hedge against inflation because of the rising demand and capital appreciation of these properties.
- A lot of investors have been moving to Dubai from both Russia and Ukraine because of the Russian-Ukrainian conflict hence increasing the demand for properties.
The Luxury Property Market in Dubai is on the rise Some of the latest launches in the luxury market segment like Six Senses at the Palm, Serenia Living, One Zabeel, Residences by Dorchester Collection, One at Palm by Dorchester Collection, are either sold out or about to get sold out in short term with the rising demand.
The major question that lies ahead is if the Luxury Property Segment will double its market share or drop-down with the rise in inflation around the world.
Looking for a luxury property in Dubai? Contact Houzon today!