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• In 2021, Dubai sold 93 homes worth $10 million or more.
• The average value of a home will rise by 9.2% in 2021.
Knight Frank’s new whitepaper, Dubai’s COVID Comeback, says that sales of ultra-prime homes, which are homes that cost more than US$ 10 million, have reached all-time highs.
In 2021, more than 52,000 apartments and villas worth a total of AED 114.2 billion sold in Dubai’s housing market. This is more than in 2019 and 2020.
Faisal Durrani, partner and head of Middle East research at Knight Frank, said, “The international elite continue to have an insatiable appetite for Dubai’s most luxurious homes. This has driven sales of US$10 million homes to an all-time high of 93 in 2021, which is more than the last five years combined.” In 2021, Dubai will sell 39% of the US$10 million homes that have been sold there since 2010. This shows how busy the very top of the market is. This shows how much demand is at the very top of the market. And wealthy people from places like India, Russia, and Europe, such as Switzerland and Monaco, continue to buy luxury homes in the city.
“Additionally, in the year leading up to September 30, 2021, our Prime Dubai Index, which includes Emirates Hills, Jumeirah Bay Island, and the Palm Jumeirah, house prices increased by 44.4 per cent.” Surprisingly, this isn’t the fastest growth rate; that honour goes to the third quarter of 2017, when prime values went up by 57.3 per cent.
But Knight Frank’s analysis shows that things are a little different in the mainstream market, especially when it comes to apartments. Even though people’s work habits are changing, the pandemic still makes them want more room. The fact that villa sales keep going up shows that people still want bigger homes. In the fourth quarter, 29% more villas were sold than in the third quarter.
Knight Frank’s research shows that villa prices have gone up by almost 22% since the pandemic, while apartment prices have not gone up as much. Everyone wants to know if this is the beginning of a new price bubble.
“Everyone is wondering if this is the start of a new price bubble. The answer is that it’s hard to say, but probably not. It depends on how much you are willing to pay. Even though supply is always a risk to the downside, the total stock in Prime Dubai is only a small part of the market as a whole. Only 3.6% of what’s planned to be delivered in 2022 will be in Prime submarkets, where demand is growing. This means that prices in this part of the market can still go up.
“Overall, it’s clear that prices can’t keep going up forever, and more buyers in the mainstream market stop thinking about whether prices are “good value. There are already signs that the prices of villas won’t go up by 21.2% in 2021. There’s no doubt that price growth will slow down this year. The prime and super-prime end of the market, on the other hand, will do better because the supply of luxury and ultra-luxury properties is so low. “Dubai’s response to the pandemic has created an overwhelming sense of optimism, which we see reflected in the market and the economy,” Durrani said.
Knight Frank says that the price of homes and the fact that the market in the emirate has been very volatile in the past will make people less eager to buy at what they think is the market’s peak. But this third cycle has been going on for just over a year, and prices are still 26.6% below the last market high. Also, processes have gone on for almost ten years in the past. There is a good chance that prices will stop going up or down.
Andrew Cummings, partner and head of Prime Residential at Knight Frank Middle East, said, “Dubai will be the first major city in the world to reopen its borders after a single six-week lockdown in December 2020. This will send a very strong message to international travellers and investors.” People feel this has had unintended but good results in a market-driven way. Since the pandemic’s start, this flood of capital from UHNWI has led to many deals that broke records.
Last summer, a new record was set when a European paid $32.9 million for a villa on Jumeirah Bay Island. Before the Jumeirah Bay Island mansion was sold, the most expensive home to sell in 2021 was One100 Palm, which sold for more than US$30 million last spring. Land deals have also reached new heights. In January 2022, a double plot on Jumeirah Bay Island sold for AED 150 million. The highest price ever paid for land on the island.
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