Dubai Is Now the 1 Luxury Home Market, with expensive real estates!

Dubai is the 1 expensive real estate market, Can It Remain That Way?

When you think of cities with the most expensive real estate sales, places like Hong Kong, New York, and London come to mind. And historically speaking, those cities have dominated the sales statistics for luxury homes and expensive real estate valued above 25 million dollars. Just a few years ago, before COVID-19, London saw the highest number of luxury and expensive real estate sales in 2015, New York in 2016, and Hong Kong in 2017.

No other city, including Los Angeles, Sydney, and Singapore came anywhere close to those sales numbers. Dubai in particular barely saw any property sales in the 25 million US dollar price category. However, this has changed. In 2022, for the first time, Dubai is ranking in fifth place behind Hong Kong with 26 expensive real estates valued above 25 million US dollars. And when you include slightly more affordable properties valued above 10 million US Dollars, Dubai is ranking in fourth place, almost tied with London.

That was back in 2022. Since then, the rate at which high-net-worth individuals are investing in Dubai real estate has only increased. In the first quarter of 2023, Dubai recorded more sales transactions for homes valued above 10 million US Dollars than any other city worldwide. With 88 home sales in the 10 million US Dollar plus category, Dubai has comfortably eclipsed Hong Kong, New York, and London as the number one city globally for luxury home transactions.

In this article, we will find out how Dubai has become the world’s number one luxury and expensive real estate market, look at some of the most expensive Dubai property sales, and discuss whether Dubai can remain at the top of sales statistics for the foreseeable future, how Dubai rose to the top of the global luxury and expensive real estate market. Dubai’s real estate market is fairly novel.

How did Dubai get this way?

The city only allowed foreigners to acquire real estate in 2002. Similarly, the city’s economy is tourism and trade-based and does not reach the economic clout of larger powerhouses such as New York or London. Dubai’s stock market is tiny by global standards, and the city is not home to a single Fortune Global 500 company.

Dubai also does not have access to a large domestic market. Just 10% of its population is local Emirati, and the entire country - the UAE - has a population of just around 10 million people. New York and London are the largest cities in some of the largest economies in the world. And Hong Kong is the most international city in greater China.

Due to these circumstances, Dubai’s property market is sustained by other, non-traditional pull factors. Primarily entrepreneurs relocating to the city for lower taxes, wealthy retirees from Europe, and Asia, as well as affluent families looking for a vacation home in the emirate. Dubai’s unique position as the world’s largest city without personal income taxes, multiple visa-by-investment programs, and excellent ease of doing business have drawn large numbers of wealthy immigrants.

These globally unique pull factors have made Dubai the city with the world’s highest net millionaire immigration rate, as we will cover in detail in another article. However, the question remains, why has Dubai’s property market picked up only recently?

There are multiple reasons.

1. COVID-19

Dubai managed the COVID-19 pandemic incredibly well. The city only had a 1-month lockdown, and welcomed foreign visitors as early as summer 2020. As other cities and vacation hotspots remained locked down, Dubai was wide open. Tourists that would usually vacation in Europe or the US, would travel to Dubai instead and discover the city and its incredible pandemic response. Some of those visitors would end up investing in Dubai, also because of the city’s affordability. That brings us to the next point.

2. Low Property Prices

Despite recent increases, Dubai’s property prices remain relatively low compared to other global cities. For example, 1 million USD buys you 2700 Sqft of prime and expensive real estate in Dubai, but just 1060 sqft in New York City. Investors and owner-occupiers looking to get more bang for their buck can do so in Dubai. Dubai’s lower property prices, particularly before 2020, also made it less common to reach property valuations above 10 million or 25 million USD.

3. Dubai’s 10-Year Golden Visa Program

Another major pull factor has been Dubai’s 10-Year Golden Visa Program. While the Golden visa was introduced in 2019, only recent changes made in 2021 allowed real estate investors to qualify The minimum investment requirement of 2 million AED not only led to increased demand for premium properties. Investors need to keep their investments, to keep their visas, thus limiting future selling pressures.

4. the Ukraine war and Western sanctions on Russian nationals

Another recent demand factor that makes Dubai the king of expensive real estate has been the Ukraine war and Western sanctions on Russian nationals. As Russians are unable to travel to or invest in Europe or the US, the UAE remains wide open. As a result, wealthy Russians have relocated their second homes and property investments to the UAE.

Now let’s look at some of the most expensive real estate sales in Dubai over the past year.

The most expensive real estate sales in Dubai

The most expensive apartment ever sold in Dubai is a 9-bedroom penthouse in the Bvlgari Lighthouse condominium tower. The tower will be constructed on newly reclaimed land that extends the existing Bvlgari 5-star Residences on Jumeirah Bay Island. Sold at 410 million dirhams or 112 million USD, the penthouse has a size of 38,970 sqft, of which 13,066 sqft are balconies and terraces.

The second most expensive Dubai apartment is a 5 bedroom -penthouse in the royal Atlantis, on Palm Jumeirah. Sold for 163 million dirhams, or 44 million US dollars, the 25,208 sqft apartment features 360-degree views over the Palm and Dubai. Both these apartments are exemplary of Dubai’s relatively low square foot prices for super-prime real estate.

In New York’s Billionaire’s Row, the most expensive apartment, located in Central Park Tower, costs a whopping USD 250 million and only provides 17,500 square feet of space.

The big question is whether Dubai will remain at the top of luxury home sales statistics.

Will it remain that way?

While the Golden Visa program remains a powerful attractor for investments, the effects of the COVID-19 pandemic and the Ukraine war will likely taper off.

Dubai has a considerably smaller population than New York, London, and other top and expensive real estate markets. As a result, just from a statistical standpoint, it is unlikely for the city to keep outselling other, much larger cities. Even if Dubai sees a decrease in luxury and expensive real estate and property sales by two-thirds, it would still outsell New York when adjusted for the city’s population size.

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