Global Comparisons – Around the World in Prices and Yields
- Despite the popular global assumption that the majority of Dubai’s real estate stock and transaction volumes are concentrated in the prime/luxury end of * As the market continues to be flooded with new stock in the lower end, the top segment may provide better prospects for investors in the coming few years.
- Prime and ultra-prime property prices in Dubai are now amongst the lowest of any comparable global hub.
- Prime properties in Dubai are approximately 40% less expensive than in Singapore and 50% less than in Moscow and Paris.
- Dubai’s ultra-prime market is also relatively inexpensive, with average prices almost 60–70% lower compared to cities such as Shanghai and Tokyo.
- The long-term investment potential in Dubai’s prime segment is reinforced by a nominal tax regime and notably low real estate investment costs.
- Cities such as Hong Kong carry investment costs of approximately 32%, while costs in Singapore and Tokyo are nearly 20%, representing an additional charge equivalent to almost a quarter of the value just to buy, sell or hold property.
- With notably low buying and selling fees, and almost no holding charges, investment costs in Dubai amount to just 8%.
- Although these costs are often overlooked by investors, they have a significant impact on any comparison of prospective investment yields in different cities across the world.
- The trickle-down effects of continued low oil prices, a strong US dollar and continued geo-political uncertainty have collectively cast a significant dent in the absorption levels in prime stock.
What Does 1 million USD buy?
- Prices of prime and ultra-prime properties in the city are currently the lowest compared to other global hubs.
- As the market grows and matures, prime and ultra-prime sectors are likely to offer significant investment opportunities to developers and investors.
- It is interesting to note, that the ultra-prime market is less established in Dubai relative to the prime sector. For example, you can buy almost thrice the area for prime property in Dubai, while in the ultra-prime sector, properties 4-5.5 times bigger can be acquired when compared to similar spatial benchmarks in New York or London.
- This indicates that Dubai has reached a relatively stronger position in the prime market on the global scene, whilst it still has significant potential to grow in the ultra-prime segment.
- It is likely to see continued investment inflows from global and regional investors, causing prices to stabilise - marginally contracting the gap in capital values with other global cities and witnessing gradual yield compression over the long term.
