property

Dubai’s luxury properties win back global investors

The soft market conditions is another factor pulling buyers looking at long-term gains

08:59 March 7, 2018
Royal Atlantis Residences designed by KPF Associates
PW_170215_One Palm_courtesy-Omniyat
Maria Morris and Liam Bailey
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Dubai: Developers in Dubai building homes worth Dh10 million and more have reasons to hope - global high networth investors are once again renewing their interest in such super-prime offerings. And these funds will have less of the speculative flavour about them.

“The luxury real estate investor base in Dubai is twice as diverse as in London or New York - that breadth of demand will provide some stability,” said Liam Bailey, Global head of Residential Research at Knight Frank, the London headquartered consultancy which issued its annual wealth report on Wednesday. “There had been a number of property markets worldwide that had gone through a challenging period in the last couple of years. Dubai has had issues on pricing and we had seen the same thing happening in London.

“But alternative investments (including real estate) continue to take in demand from wealthy individuals. We are living in extremely uncertain times (rife) with generational conflicts rather than of the national kind. And the best safe haven in such times is real estate.”

In Knight Frank’s rankings, Dubai is placed in the 85th spot among the top 100 cities for luxury real estate, with Delhi and Bengaluru occupying the 83rd and 84th spots. Dubai’s top end of the residential market saw prices decline by 3.3 per cent over a 12-month period up to December last, while Abu Dhabi, which is in 95th place, saw a decline of plus 10 per cent.

At the top of the table are the Chinese city of Guangzhou, where values had shot up 27.4 per cent, and Cape Town, where luxury residences enjoyed a 19.9 per cent gain.

The re-entry of wealthy investors into Dubai’s real estate scene has a lot to do with the still soft pricing. “Dubai still has some way to go before it rates as a maturing market,” said Bailey. The investor interest is not just not resonating in the residential space, but even underpins commercial assets such as industrial property.

“Australia and New Zealand are the other markets that are well placed in drawing more global investor interest. Even though from a domestic buyer’s perspective, both are already priced too high.”

That a number of high-end developments are being readied in Dubai should keep investor interest in good order. If the Bulgari-branded mixed-use development off Jumeirah was the focal point for such demand last year, the likes of Bluewaters and Nikki Beach will sustain inward interest. And so will the Atlantis Residences, One Palm (with its Dh102 million penthouse), and all of the villas in MBR (Mohammad in Rashid) City in clusters such as Dubai Hills Estate and the Hartland.

According to Maria Morris, Partner at Knight Frank, “Dubai’s prime real estate is going through a transition and there are now various opportunities that were not there even five years ago.”

And the rush by developers in the last two years to come out with more mid-market options means there is far less chance of an oversupply happening at the prime end. Developers holding ready stock or building new ones priced in the tens of millions needn’t worry - there are buyers out there.

In Dubai, luxury is still a bargain

* Someone with $1 million to spend will find that it can fetch him 138 square metres of luxury real estate in Dubai. The same in Monaco would only get 16 square metres, 22 square metres in Hong Kong, and 25 square metres in New York, according to Knight Frank’s Wealth Report.

* The report names the Palm as among the “peak performers”, alongside Sydney’s Forest District and Shanghai’s Hongqiao CBD. With the development of The Pointe and Nakheel Mall, offering some 5.9 million square feet of entertainment, dining and retail, the appeal of the (Palm’s) stem is set to broaden. A two-bedroom apartment starts at $750,000, while garden homes and villas start at US$3 million, says the report