Dubai set for 'best-performing prime residential sector in the world'

New report from Savills places emirate among the top four in the first half of 2022

10th: Milan - 3.0% rise from Jan-June. Image by Atlantide Phototravel / Corbis

9th: Berlin - 3.3% rise from Jan-June. AFP

8th: Cape Town - 3.5% rise from Jan-June. Bloomberg

7th: Lisbon - 3.7% rise from Jan-June. Bloomberg

6th: Seoul - 4% rise from Jan-June. AFP

5th: New York - 4.3% rise from Jan-June. Reuters

4th: Dubai - 4.7% rise from Jan-June. AFP

3rd: San Francisco - 5.5% rise from Jan-June. AFP

2nd: Los Angeles 6.5% rise from Jan-June. Courtesy Engel & Volkers

1st: Miami 12.5% rise from Jan-June. Getty Images / AFP

Dubai is set to have the best-performing prime residential sector in the world, according to a new report.

The city was ranked fourth in global real estate adviser Savills' bi-annual study of prime residential capital values across 30 major global cities.

This comes after its prime property prices grew by 4.7 per cent in the first half of 2022.

Dubai was the only non-US city to make it into the top five, coming behind Miami, Los Angeles and San Francisco.

The city was boosted by an inflow of high-net-worth individuals and the success of its Golden Visa scheme, and is predicted to continue to attract wealthy people “at above pre-pandemic levels”, the report said.

It also benefited from a renewed appreciation for warmer climates, higher quality of life and an increased desire for more space, the Savills added.

“Dubai is set to perform the strongest for the remainder of 2022 and factors that work in its favour include the continuously positive changes to policies, the most recent being additional benefits for long-term visa holders, with the opportunity for residents to have a superior quality of life at their fingertips,” said Helen Tatham, Savills' head of prime residential Dubai.

“In addition to a surge in high-net-worth expatriates choosing Dubai as a new long or part-time residential location, there is a growing trend of existing residents taking a long-term view on making Dubai their primary home.”

Dubai property prices have been rising across all sectors during the past year as the economy recovered from the coronavirus-induced slowdown.

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Dubai villa prices — June 2022

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The market had the second-strongest June on record in terms of transaction volumes, which hit 8,865, according to a report by Property Monitor, with prices remaining more than 10 per cent higher on an annual basis.

This year has had a record set for the most expensive home in the city at Dh280 million ($76.24m). And brokers told The National that they expect the record to be broken again before the end of the year.

Many global cities are experiencing the impact of geopolitical uncertainty, increasing inflation and rising interest rates, although this has yet to materially impact pricing in the prime markets, Savills said.

Meanwhile, Savills reported that prime residential rental growth outpaced capital value growth in the first half of 2022, increasing by an average of 3.1 per cent compared to a 2.4 per cent rise in capital values.

“Stock shortages and pent-up demand following migration to cities with the reopening of international borders at the end of 2021 continued to fuel growth,” Savills said in its report.

“A revival of corporate travel, purchasers ‘trying before they buy’ and a prioritisation of the home thanks to more remote working, are all factors driving the growth in the prime rental markets of the world’s leading cities.”

Dubai ranked seventh among the cities included in the study, with a 5.3 per cent rise in prime rents in the first half. New York and Singapore were top with an 8.5 per cent rise, followed by London with 7.7 per cent.