Knight Frank - Dubai Residential Market Review Summer 2023
Knight Frank - Dubai Residential Market Review Summer 2023
Market Review
Summer 2023 A quarterly review of key trends and the performance of knightfrank.ae/research
Dubai’s residential market
Average prices rise by
4.8% in Q2
Residential values across Dubai rose by 4.8% during Q2 While price growth over the last three and a half years has
2023, marking the 10th consecutive quarter of price rises. undoubtedly been strongest in the city’s most expensive
The latest increase leaves values 24% higher than Q1 2020 submarkets, more affordable locations, at least on a price
however, average prices remain 11% below the 2014 peak. psf basis, have also experienced a surge in values.
On an annualised basis, prices are up by 17%.
Demand for homes in inland communities, which are
At a segment level, apartment prices increased by 4.8% to relatively more affordable than coastal developments, for
a little over AED 1,290 psf during Q2, with values now 21% instance, have registered some of the steepest rises over
higher than in Q1 2020. Despite rising by 17% over the last the last 12-months, fuelled by domestic buyers.
12 months, apartments still trail the 2014 peak by 14%.
At Dubai Hills Estate, for instance, apartment prices stand
In addition, villa prices also increased by 4.8% between at approximately AED 1,940 psf, an increase of almost 27%
March and June to reach an average of AED 1,520 psf, a in the last 12 months.
rise of 15% from last summer and 51% higher than January
2020 levels. Similarly, at Jumeirah Islands, villa prices have increased
by 56% in the last 12 months alone to reach AED 2,510 psf,
This growth is being driven in large part by the sustained positioning it as the neighbourhood with the fastest rising
strong demand for luxury second homes from the villa values.
Apartments Villas
international elite. Unsurprisingly, this level of growth has
resulted in villa prices surpassing the last market peak in
2014 by almost 5%. This figure is substantially higher in -14.2% 7.4% 15.1% -3.1% 3.6% 7.9% -6.2%
high-demand neighbourhoods, which we explore below. Q/Q Q/Q Q/Q Q/Q Q/Q Q/Q Q/Q
AVERAGE VALUE OF RESIDENTIAL TRANSACTIONS (BY PROPERTY TYPE) -3.4% 18.0% 18.9% 24.7% 17.5% 10.9% 32.1%
Y/Y Y/Y Y/Y Y/Y Y/Y Y/Y Y/Y
AED psf
1,400
23.5% 7.6% 35.3% 239.8% 127.8%
Q1/20 Q1/20 Q1/20 Q1/20 Q1/20
1,200
1,000
800
Discovery Garden
International City
Dubai South
Arabian Ranches
Jumeirah Islands
Dubai South
peak peak peak
400
200
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
2 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 3
Palm Jumeirah is still the
star performer
The Palm Jumeirah remains the city’s star-performing Not far behind The Palm Jumeirah are Dubai Hills Estate
villa market, with prices growing by 9% in Q2 alone. This villas, where values have increased by 24% over the last
performance has propelled the growth rate to 44% over the 12 months, followed by Mohammed Bin Rashid (MBR)
past year. City and District One, where prices have grown by 13%
and 14%, respectively, over the same time period.
The exceptional demand for homes in Dubai’s iconic Palm
Jumeirah is best reflected in the fact that villa prices have While apartment transacted prices have not risen at the
risen by 146% since January 2020, but remain at about same rate as villas, some of the city’s most sought-after
AED 4,800 psf, making property on The Palm Jumeirah locations have experienced significant price rises.
relatively affordable on a global scale.
However, villa prices are now 67% higher than their 2017 Downtown (AED 2,440 psf) at 12.5%, for instance, which
peak, while apartments still lag their last peak in 2015 by was named as the second most popular target location by
7%. global HNWI in our recently published 2023 Destination
Dubai report, leads the league table for the first six
months of this year, closely followed by Business Bay
(12.4%) and The Palm Jumeirah (11.7%).
Average transacted prices on the Palm Jumeirah Average value of residential transactions (by villa submarket)
AED psf AED psf
Apartments Villas Arabian Ranches District One Dubai Hills Estate Emirates Hills MBR City Palm Jumeirah
5,000
5,000
4,500 4,500
4,000
4,000
3,500
3,500
3,000
3,000 2,500
2,000
2,500
1,500
2,000
1,000
1,500 500
0
1,000
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Q1 2012
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
4 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 5
Prime prices up 11.6% in Q2
Dubai’s prime markets, in particular, remain highly
sought after and are responsible for 13% of transactions
(by total value) that have taken place during H1 across
the city. The submarkets that we classify as prime are The
Palm Jumeirah, Emirates Hills, and Jumeirah Bay Island.
Alpago’s Palm Flower
(11 apartments)
With average prime transacted prices standing at around
AED 3,560 psf, or about US$ 970 psf, Dubai remains one
of the world’s most affordable luxury home markets,
which continues to add to the city’s appeal amongst
international buyers.
1,500
1,000
500
“Just 368 homes are expected in Dubai’s prime neighbourhoods
between now and the end of 2025.” 0
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Source: Knight Frank, REIDIN
6 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 7
Sustained ultra-prime
demand
Dubai’s luxury homes market continues to attract the Furthermore, with 188 US$ 10 million home sales in the
attention of the world’s wealthy, with global high-net- first six months of 2023, the city is expected to exceed
worth-individuals remaining laser focussed on acquiring the total number of US$ 10 million homes sold in 2022.
second homes in the emirate, as evidenced by the In addition, with average transacted prices continuing to
US$ 3.3 billion worth of homes sold in the exclusive hover at around AED 6,700 psf, or about US$ 1,800 psf,
US$ 10 million+ price bracket during H1. the emirate continues to offer relatively affordable access
to uber luxury living. Still, the average transacted price in
this segment of the market is up 7% on 2022’s AED 6,250
psf.
2017
15
23
Downtown
Business Bay
5
4
6,700
psf
150
2018 13 Jumeirah Beach Residence 4
Total 188 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2018 2020 2021 2022 H1
2023
Source: Knight Frank, REIDIN Source: Knight Frank, REIDIN
Source: Knight Frank, REIDIN
8 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 9
Sustained ultra-prime Global US$ 10 million+ home sales in 2022 – top 10 locations
What’s more, with 92 deals, Dubai emerged as the busiest US$ in Q2. The average sales price during Q2 stood at US$ 2 New York 244 US$ 4.5 billion
10 million plus market in the world during Q1 2023, edging past 17.5
Hong Kong (67) and New York (58). million for all US$ 10 million+ home sales. 3 LA 234 US$ 4.5billion
The city’s prime neighbourhoods of The Palm Jumeirah, Other neighbourhoods such as Jumeirah Golf Estates, 4 Dubai 224 US$ 3.9 billion
Emirates Hills, and Jumeirah Bay Island continue to dominate Al Barari, Tilal Al Ghaf, and Jumeirah Islands are
sales, accounting for 33% of all US$ 10 million plus home sales likely to soon qualify as prime and remain on our 5 Miami 149 US$ 2.7 billion
“prime watch list”.
6 Hong Kong 131 US$ 2.9 billion
10 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 11
Off-plan sales rise
One of the key features of Dubai’s current and third This trend is also echoed in our 2023 Destination Dubai
freehold residential market cycle has been the dominance report, with 53% of HNWI buyers focussed on acquiring
of genuine end-users and second-home buyers in ‘recently built/completed’ homes in Dubai. It is strongest
particular. among those with a net worth of over US$ 10 million (61%),
as well as 71% of HNWI from East Asia. Overall demand
Historically, the market was driven largely by speculative for off-plan purchases is relatively low at just 10% among
activity, fuelled, of course, by the abundance of off-plan global HNWI.
purchase options. In 2009, for instance, just as the Global
Financial Crisis was looming large, 61% of all home sales in With a rise in the volume of product launches over the
Dubai were off-plan transactions. The 10-year average has last 12 to 18 months, as developers respond to the stable
settled at around 42%, and both 2021 and 2022 – the first and sustained demand for homes, the volume of off-plan
two years of this third property cycle – have stood at 42% homes sold has been unsurprisingly rising. Indeed, during
and 44%, respectively, broadly in line with the 10-year H1, off-plan sales, at AED 65.7 billion, have edged out sales
average. for ready homes (AED 64.4 billion).
Dubai residential off-plan vs. secondary sales (by value) Prime submarkets residential off-plan sales vs. secondary sales (by value)
AED billions AED billions
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source: Knight Frank, REIDIN
Source: Knight Frank, REIDIN
12 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 13
Residential values in Dubai | Q2 2023 AED psf
900 - 1,400
1,401 - 1,900
1,901 - 2,400
2,401 - 2,900
Apartments
2,901 - 3,400
3,401 - 3,900
Villas
3,901 - 4,800
AED 2,370 psf
27% Not applicable
y/y
44%
AED 4,720 psf y/y
14%
AED 2,230 psf y/y
AED 1,560 psf
13%
y/y
The Springs
14% 13%
y/y AED 1,090 psf y/y
7%
y/y
23%
AED 1,330 psf y/y 16% 8%
AED 1,230 psf y/y AED 1,320 psf y/y
14%
y/y AED 1,340 psf
Damac Hills (Akoya) Arabian Ranches Al Barari Source: Knight Frank, REIDIN
Apartments dominate supply
While supply remains tight in the city’s prime One of the most significant additions to the city’s
neighbourhoods, the pipeline of new homes under residential supply is the under-construction apartment
construction across the rest of the emirate is continuing to development by Damac: Akyon City Phase 1 Tower A,
grow. comprising 3,145 units, set to be completed by Q3 2023
in Business Bay. Elsewhere, Seven City in Jumeirah Lake
We expect 85,200 homes to be delivered by the end of Towers is expected to add around 2,700 homes to Dubai’s
2028, 69% of which are apartments (59,000 units). Almost total stock in 2027.
40,000 of these homes are expected to be completed this
year alone. In addition, Damac Properties is undertaking several villa
projects in Damac Lagoons and Damac Hills totalling to c.
While this figure is above the long-term average of around 5,100 units to be completed between 2024 and 2026.
35,000 home completions per year, we do not expect this
total to be met, with 30% to 40% likely being delayed until Emaar Properties is also undertaking several villa projects
next year; a common feature in Dubai’s residential market. mainly in MBR City and Arabian Ranches totalling c. 3,900
units to be completed by 2025.
Indeed of the 40,000 homes expected this year, just 8,600
have been handed over to date. Lastly, Dubai South is another submarket that is
undergoing several villa construction projects, The Pulse
Excluding 2023 and assuming all 40,000 homes are Beachfront 1, 2, and 3 to name a few. A total of c. 1,100
completed this year, 42,500 units are scheduled for units are due for completion by 2025
completion between 2024 and 2028, representing an
average of just 8,500 homes per year – a 75% reduction
on the long-term rate of home deliveries, strongly hinting
at continued upward pressure on prices, particularly as
the population continues to swell, recently surpassing 3.5
million residents. DUBAI RESIDENTIAL SUPPLY BY SUBMARKET (2023-2028)
No. of units
Apartments Villas
25,000
5,000
2 Business 9,746 Business Bay 9,746 Damac Lagoons 4,676
Bay
3 Dubai Land 7,213 Jumeirah Village 3,861 Jebel Ali 3,984 0 MBR City
Business Bay
Jumeirah Village
Jebel Ali
Dubai Harbour
Dubai Land
Deira
International City
Umm Suqeim
Al Jadaf
Bur Dubai
Barsha Heights
Dubai Sports City
Palm Jumeirah
Dubai Festival City
Dubai Marina
Tilal Al Ghaf
World Islands
Dubai Science Park
4 Jebel Ali 5,698 Dubai Creek Harbour 3,008 Dubai South 3,851
16 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 17
In focus: project launches
IN FOCUS: PROJECT LAUNCHES
In addition to the under construction supply detailed (14%), Business Bay (14%), The Palm Jumeirah (11%), projects by number of units.
There are number
above,
Dubai’s
of new
we are also
total residential
developments
launches
tracking
stock
that are yet in
that
project
tothe
will contribute
launches
next
break
to
– these are
four to five years.
ground.
AlmostDubai
47 new
2023 alone
residential
Harbour (10%), projects were Village
and Jumeirah launched in Q1
Circle
(9%). with apartments continuing to dominate.
(JVC) In addition,
Other recent villa-only Dubaiinclude
launches
residential
Ranim 5, 6, 7, and
Expo City
developments.
8, with a total
theunveiled
Mudon Al
of 870 units allThese
the launch of several
willto include Expo
expected
c. 12,000
be completed by 2026.
units
Central: Mangrove and Sky apartments, 450 and 401
As well as the 30,000+ units detailed in our Dubai One of the biggest announcements of Q2 was the launched units
For a project to be classed as forthcoming supply, ground Damac Bay by Cavalli at Dubai Harbour (885 units), Design units, respectively. (not yet under
Residential Market Review - Spring 2023, an additional relaunch of Palm Beach Towers in The Palm Jumeirah In addition, The Valley – Riviana (486 units), May at
must12,000
be broken construction)
unitsand/or construction
were launched in Q2,must bewhich
83% of underway.
were Quarter Towers
with 1,265 at Dubai
units Design
to be District
delivered by Q4(558 units), DG1
2025. Arabian Ranches 3 (298 units), and South Bay 2 and 3 (358
apartments. This takes the total number of unit launches Living at Business Bay (247 units), Serenia Living at Palm units) at Dubai A further
South are532
alsovillas will that
projects be constructed in Expo Valley, with
were launched
Withtothis
42,000.
definition in mind, we are currently tracking Elitz(226
Jumeirah 2 by Danube Properties
units), Central Parkfollows
Towerswith
at788
Cityunits
Walk between April and June of this year.
completion expected by the end of 2026.
expected to be completed by 2026. Binghatti Gardenia
approximately 30,000 units in their launch stage. (458 units) are some of the apartment launches, to name
The majority (58%) of the launched projects were (700 units), Bayview (664 units), and Seapoint at Marsa
These are all excluded Total number of launched units
concentrated withinfrom oursubmarkets:
five key current supply pipeline
Al Barsha South a few. Dubai (661 units) all ranked among the top 5 launch
predictions.
JLT
415
Palm Jumeirah
Al Wasl Jumeirah
1,361
148
Dubai Harbour
1,148
Al Barsha South Business Bay
1,695 1,645
The Valley
486
In focus: cash is still king EXPERT INSIGHT
When it comes to financing high-value property in Dubai, banks have their internal lending limits. Regular
mortgages typically go up to 35 million Dirhams, but there are private banking and commercial lending options
which can go much higher, depending on the client’s income and other assets. Residents and non-residents can
Cash purchasers continue to dominate Dubai’s most Despite minor fluctuations, the stronghold of cash buyers
secure finance from local and international banks that operate in the UAE. The loan to value and rates varies based
luxurious residential properties, and currently account for remains evident, reaffirming Dubai’s appeal for those
on where they are normally resident.
c. 80% of the total value of all transactions in Q2 2023. seeking to capitalize on secure and cash-driven real
estate transactions.
Typically, non-UAE residents will need a down payment of 40-50%, resident expats can secure a mortgage with a
This is shown by the percentage split between cash and
20%-30% down payment, and local Emiratis 15-25% depending on the property value or purchase price.
mortgage buyers over various quarters, which reflects this
ongoing trend.
There are several ways to finance high-value property purchases here in Dubai real estate, by securing finance
against the property itself based on personal income, leveraging overseas assets like Real Estate or stock portfolios,
or taking debt against an operational business. These tend to be the most common. If buying high-value, tenanted
rental properties, portfolios, or full buildings it’s also possible to use the existing rental income to secure finance.
Bradley Rands
Partner, Head of Mortgage & Debt Advisory
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
20 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 21
Population and economic
growth drive price increases
Dubai’s headline-grabbing real estate market has been Dubai’s non-oil sector PMI reading stood
supercharged by positive sentiment, a key ingredient in at 55.7 in July, marginally down on June
the Middle East. (56.9), but remaining in expansionary
territory for over two-and-a-half years (S&P
This positivity received a further boost with the Global). Businesses remain upbeat about
announcement of D33, Dubai’s Economic Agenda. the future and are continuing to recruit and
grow, the impact of which is being felt in
Aside from outlining a new roadmap for the emirate to the office market, which is facing a Grade
double its foreign trade and emerge as the world’s fourth A supply crunch. Read more in our Dubai
most prominent financial centre behind New York, Office Market Review – Summer 2023.
London, and Singapore by 2033, the population by this
stage is also expected to approach six million, up from 3.5 Dubai’s GDP grew by 2.8% in the 12-months
million today – a critical consideration in our long term to the end of Q1. While lower than the
outlook. 4.4% recorded in the preceding 12-months,
recent growth is coming off a higher base.
The predicted growth in the city’s inhabitants will warrant Retail, trade, aviation, and hospitality all
the need for a large-scale residential development boom. continue to dominate, the latter of which
is demonstrated through the fact that the
Indeed, the city’s current housing stock will virtually need city’s nearly 150,000 hotel rooms recorded
to double if the population targets are to be met, which the an average occupancy of 78% during H1,
government expects to swell to 7.8 million by 2040. the highest level in the world. And this was
supported by 8.55 million tourist arrivals, a
The pressure of the growing population is already evident 20% rise on H1 2022, and the best first half
in the real estate market, with residential values climbing on record.
over the last three and half years – while apartment prices
still lag the 2014 peak by as much as 13.5%, villas now cost The number of customers registered by
as much as they did nine years ago. the Dubai Electricity and Water Authority
(DEWA) has grown by 5.5% in H1 when
The key driver for this disparity is the global race for space compared to the same period last year.
and the dearth of villas across Dubai, particularly at the While this covers all real estate sectors, it is
upper end of the market. yet a further indication of the growth in the
emirate's population.
22 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 23
Rents keeping pace with EXPERT INSIGHT
capital values Rental growth continues to closely mirror sales price trends, avoiding yield compression. Prime single-let apartment
yields (6.25%-7.50%) remain slightly higher than villa yields, however, some beach-front neighbouhoods that attract
holiday makers can achieve significant premiums.
Stephen Flanagan
Away from the sales market, rental growth remains Ranches (AED 82 psf), average lease rates have climbed by Partner – Head of Valuation & Advisory, MENA
virtually in lockstep with sales prices, meaning there nearly 31% and 17% in the last 12 months, respectively.
has been no yield compression. Yields for single-let In addition, apartment rents have also grown, rising by
apartments (7.4%) remain just ahead of what can be 23% since last year, and currently stand at AED 94 psf,
achieved for villas (6.0%). representing an increase of 3.6% from Q1. Business Bay
(28%) and The Palm Jumeirah (18%) lead the pack with the
Average rents in the city currently stand at AED 92 psf, a strongest rental growth since last summer.
rise of 3.7% from Q1 and 22.3% higher than last summer.
Rents for villas in The Palm Jumeirah have increased by Overall, apartment lease rates are now 32% above January
about 15% compared to Q2 2022 and by just over 110% 2020 levels but are still some 10% lower than the last
overall since January 2020. Rents here currently stand at market peak in 2014.
AED 151 psf.
Villas, on the other hand, have seen average rental rates
In the mainstream market, more affordable villa locations rise by close to 65% over the same period and are now
are also recording similarly high growth in lease rates. almost 13% higher than the last peak in 2014.
For instance, at The Springs (AED 83 psf) and Arabian
12.7%
Above 2014 peak
(villas)
-9.9%
Below 2014 peak
(apartments)
24 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 DUBAI RESIDENTIAL MARKET REVIEW – SUMMER 2023 25
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