A RECORD burst of sales in the priciest corners of the global property market may be ushering in a post-pandemic era of exuberance in real estate — with Dubai among the front-runners.
The Middle East business hub is the latest city to light up with what Knight Frank LLP called “a spectacular post-COVID rebound in luxury home sales.” In the first five months of the year, 22 properties worth more than $10 million found a buyer, the most since 2015 and up from a total of 19 last year.
Far from being an isolated hotspot, the emirate may mirror a pattern seen in other global cities, the consultancy firm said on Sunday. Homes in the wealthiest areas of London are selling at the fastest rate in seven years, according to LonRes data.
“The rebounding of Dubai’s super prime market echoes a wider global trend, signaling the start perhaps of a ‘Roaring Twenties’ for global real estate,” said Faisal Durrani, head of Middle East Research at Knight Frank.
“The uber luxury end of the market is a terrific barometer for general market sentiment,” Durrani said. “Homebuyers are clearly oozing with confidence when it comes to the emirate’s uber luxury homes market.”
Most of the transactions in the highest price bracket were on the city’s artificial island of Palm Jumeirah, with a total of about $770 million paid for properties in the $10 million range between January and May, according to Knight Frank.
Economic activity in Dubai, particularly tourism, has rebounded in the past six months as the emirate rolled out one of the world’s fastest vaccination campaigns and opened its doors to foreign visitors sooner than most other countries.
But even as luxury property appears to flourish in Dubai, other parts of the emirate’s real estate sector are struggling. State-linked developers Limitless and Meydan are restructuring debt, while one of the top realty firms, Damac Properties, sought to de-list its shares after posting hefty losses. The founder of Damac postponed the effort this month when the regulator started a review of the transaction.
And Dubai’s years-old property glut may also continue to put pressure on the value of high-end residential homes, Knight Frank recently warned.
DIFFERENT BUYERS
For all the similarities between major cities around the world, the differences are also telling.
It’s Brits who are driving the market in the wealthiest areas of London, with the portion of UK buyers currently at 62%, the highest in at least a decade, Knight Frank numbers show.
By contrast, Dubai — where foreigners already account for about 90% of the population — emerged as a haven while the most affluent home buyers fled virus lockdowns from Europe and elsewhere.
With much of the city’s real estate still working through an oversupply that drove down values by over a third since 2014, it may be a challenge to sustain demand for luxury homes while the United Arab Emirates, of which Dubai is a part, struggles to bring down the number of coronavirus infections that’s kept it on the UK’s red list.
Dubai has over 42,000 homes valued at $1 million or more, second only to London, according to Knight Frank. At the same time, prime residential properties are far more affordable in Dubai than in London, New York or Singapore.
“Investor sentiment has clearly been influenced by the way in which Dubai managed the impact of the pandemic,” said Durrani. “The world’s wealthy have their eyes firmly set on the city.”
Article and Photo originally posted by Business World last June 29, 2021, 12:03am.
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