Prices still remain 15% lower than their 2014 peak.

Data from a prominent property consultancy indicates that the prime residential market in Dubai is anticipated to have the highest global growth rate. The latest report by Knight Frank reveals that in 2023, the prime residential market in Dubai is projected to grow by 13.5 percent, which is the highest growth rate worldwide. “This growth is supported by a clear demand-supply imbalance and a positive economic backdrop,” Knight Frank said in its latest report.

Despite the ongoing surge in sales and consistent value appreciation across all sectors, residential unit prices in Dubai are still 15 percent lower than their peak in 2014. The first quarter of this year witnessed a 5.6 percent increase in residential market values in Dubai, marking the ninth consecutive quarter of growth. This growth was primarily driven by a strong demand for luxury second homes and the city's emergence as a global luxury hub, as indicated by data released by the property consultancy.

Branded residential sales, particularly driven by the demand from ultra-high-net-worth individuals (UHNWIs), have experienced a significant rise since the beginning of the pandemic. Notably, developments such as Baccarat Residences in Downtown Dubai have achieved record prices, highlighting the growing popularity of branded residences in the city.

PNC Menon, the founder and chairman of the premium real estate developer Sobha group stated, “Dubai has reinforced its position as one of the choicest markets in the global luxury residential segment in the wake of a string of investor and resident-friendly reforms initiated by the government. There has been a steady stream of high net worth buyers and investors to Dubai from overseas over the past months to set up homes allured by the city’s myriad attractions and advantages, including its image as the cleanest, safest, and friendliest residential destination in the region.”

 “Going forward, the demand for luxury properties that offer elegant living experiences in this city of choice of the ultra-rich and celebrities will continue to rise.” PNC Menon said.

Faisal Durrani, the partner and head of Middle East Research at Knight Frank, noted that despite the current strong rate of increases, prices in Dubai still remain 15 percent below their 2014 peak. Apartments have been slower to recover, trailing the previous market peak by 18 percent, whereas villas have already matched their 2014 peak and continue to be highly sought after, particularly in the upper echelons of the market. Villas in prime neighborhoods have seen even more significant growth, with prices now 15 percent higher than the first quarter of 2022.

The Knight Frank report highlights that Dubai Hills Estate and Emirates Hills have experienced substantial price increases due to domestic buyer demand for larger homes, particularly in more affordable inland communities. Dubai Hills Estate saw a remarkable 23 percent increase in apartment prices in the past 12 months, making it one of the strongest performers in the city.

According to the report, villas have outperformed the overall market with an average growth rate of 5.1 percent between January and March, reaching Dh1,450 per square foot. In contrast, apartment prices increased by 5.7 percent, reaching approximately Dh1,230 per square foot during the first quarter.

Andrew Cummings, partner and head of Prime Residential at Knight Frank, expressed: “The current market conditions, combined with a return to steady and sustainable growth, will instill confidence in homeowners and investors alike.”

“Three-and-a-half years into the current market cycle, overall price growth is moderating as the extraordinary rises registered during the pandemic begin to work their way out of the equation. The bottom line however remains a significant mismatch between demand and supply of luxury homes. This combined with Dubai’s emergence on the global stage as the go-to second homes market continues to drive prices and indeed this is why over the last 12 months, prices have risen by 13 per cent, eclipsing 2022’s 10 per cent growth,” added Durrani.

The Palm Jumeirah has been the standout villa market in the city, with prices rising by 14 per cent in the first quarter and an impressive growth rate of 53 percent over the past 12 months. Knight Frank’s data indicated that villa prices on the iconic Palm Jumeirah have surged by a remarkable 126 percent since the start of the pandemic.

“The sustained strong demand for luxury homes from the international elite has significantly contributed to the 44 per cent increase in average villa prices across Dubai since January 2020. This level of growth has allowed villa prices to reach the last market peak in 2014, demonstrating Dubai’s emergence as a leading global luxury hub,” Cummings said.