Luxury real estate demand on the up in Dubai

So far in 2017, numbers show that properties valued at Dh1000 and above per square foot are up 35 per cent. This indicates that luxury real estate is back on top in Dubai, and it’s not just applying to off plan property.

A report from consultants Reidin-GCP shows that while more expensive properties are selling more, properties priced at less than Dh1000 per square foot have only managed to gain 5 per cent. The report goes on to say that developers have responded to this increased demand for luxury property by scaling up their development launches. Individual reports also support this.

For example, Luxhabitat estate agents confirmed the sale of the most expensive penthouse yet in Dubai. They’ve sold one of the Bvlgari Residences on the Jumeirah Bay development for Dh60 million. It’s currently still under construction. Similarly, brokerage firm OBG has reported many offers for around Dh200 million for the penthouses at At Habtoor City’s only freehold skyscraper.

Payment plan strategies have changed

Developers are going in with generous payment plans post-handover, which definitely helps to increase interest. Another factor that is having a substantial effect is that prices for luxury property are now perceived as ‘oversold territory’, which makes investors think prices should rise.

Finally, it looks like the market overall has reached maturation, which also helps to make luxury property in Dubai more attractive to investors.

Welcome news for developers

Dubai’s developers are sure to find any increase in investment in luxury property space very welcome as it is generally more profitable. They can capture higher margins on higher priced property, which is always going to be the aim.

As far back as 2012, master developers anticipated the fall in interest in luxury properties, and reacted by reducing the amount of luxury launches. Now, they’re scaling up again, ready to meet the rising demand.

Higher transactions could mean prices could follow same trajectory

A lot of the current buying activity in Dubai’s residential market stems from a mix of highly visible project launches and backed up by fairly generous incentives from developers. But as each quarter sees fresh gains, could property prices follow higher? “Transactional spikes normally precede price rises,” said Sameer Lakhani of Global Capital Partners. “We are seeing a gradual increase in prices at the mid-end. The increase in activity in luxury indicates a possible bottoming out of prices is underway.”

Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in real estate and construction within the UAE and UK. Samir holds over 20 years of experience in executive management, business expansion, performance improvement, sales and marketing.