Luxury real estate in Dubai was hit, but insiders say it never was seriously threatened by the slow performance that dominated the marketplace in past few quarters. Dubai remains firmly a hotspot for wealthy buyers looking for high-end property, especially with a solid combination of competitive prices and variety, with choices in areas such as Emirates Hills, Dubai Hills, Al Barari, Palm Jumeirah, Mohammad Bin Rashid City, Downtown Dubai, Business Bay and Dubai Marina.
With the World Expo 2020 just around the corner, real estate experts believe Dubai’s high-end residential segment will become even more attractive to international buyers and investors.
“Dubai will become more of a focus as we move closer to Expo 2020,” says David Godchaux, CEO of CORE. “The additional attention will trigger more regional and international buyers to consider Dubai, especially given the surrounding regional uncertainty and [Dubai’s] central location.”
Godchaux adds: “This is going to positively impact the residential market, and in particular the prime segment. High-net-worth individuals [HNWIs] in the GCC continue to [diversify] their portfolios [with] short to mid-term [investments] in other safe havens. While investors were previously looking at London, they are now seeing the opportunities in Dubai, which is at the bottom of the real estate cycle and an attractive choice.”
Still plenty of takers for luxury realty in Dubai
Property prices in Dubai are considerably lower than in other major cities such as London, Singapore and New York, Godchaux says. At the same time, he believes the market is gradually maturing, maintaining a slower and steadier growth rate, which is more attractive to HNWIs.
The growing number of end users in the market and new regulations against speculator have also positively influenced the luxury residential real estate sector, says Andrew Cleator, Luxury Sales Director, LuxHabitat. “Affluent buyers today demand high-quality materials and finishes in their dream home, not the mediocre, mass-market [properties] of yesteryear. This has led to developers launch and deliver much higher-quality properties to meet this demand.”
Quality choices
Quality is an important factor for end-user buyers, says Ian Kirkby, Director of Luxury Sales at Gulf Sotheby’s International Realty. “The expansion of companies and new business sectors creates a larger market for CEOs, director and company owners, all striving to acquire the best that Dubai has to offer,” says Kirkby. “These are discerning clients looking not only to acquire a home of standing, but of quality in the high-end segment. The prime sector is starting to be semi-redeveloped on an individual basis with owners upgrading prime real estate in locations of maturity such as Palm Jumeirah, Emirates Hills, etc. In the maturing market, end users are looking for better-quality product.”
Market scene
Although the prime residential market is at the bottom of the cycle, Godchaux says it has not softened as much as other segments, noting that high-end property and trophy homes tend to be more resilient as buyers have deeper pockets and more leverage, which help retain value for prime properties in a slow market.
There is also very little prime residential delivery expected in developed communities. “We see limited to no new supply coming in the few established prime areas, which should result in upward pressure on prices,” says Godchaux. “There will be some new towers in Downtown Dubai and The Opera District, and most of the others are in the new districts such as MBR City with Meydan Sobha’s District One and Emaar’s Dubai Hills, City Walk and the Dubai Water Canal.”
Despite a general slowdown in transactions, real estate agents say the prime property segment has been quite active. Cleator says his company sold several properties worth at least $5 million each in the last six months, and he believes this trend will continue as new high-end developments become available for sale.
“It’s only in recent years that the major developers have realised the hunger for prime residential and currently the choice available for sale that will come online before 2020 is quite extensive, both apartments and villas. For high-end villas, five, six and even seven bedrooms are the norm and apartments tend to be four- or five-bedroom penthouses.”
Yield
However, Cleator points out that high-end property can’t match the yields of lower-priced units. “[Luxury property] tends to be only bought for end use or capital appreciation,” he says. “If you were to rent these types of property, you could expect 3-5 per cent return. This is a decent return on the world stage, but no so locally.”
Cleator says there are plenty of luxury homes in gated villa communities, which offer the added benefit of easy access to retail, schools and sporting facilities. “Another option is spacious penthouse property. Apartments that are part of five-star hotel developments will have prestigious restaurants and bars for residents to enjoy,” he adds.
Design
Contemporary designs are common, moving away from traditional or Arabic themes, says Cleator. “There is a lot more use of glass and metals as opposed to conventional materials,” says Cleator. “Basements are becoming commonplace in luxury villas, [where] spas, cinemas or other recreational facilities [are installed]. Luxury apartment designs are leaning towards floor-to-ceiling panoramic windows and balcony pools. Also, much larger apartments of at least 5,000 sq ft and duplex floor plans are gaining popularity.”
The supply in Dubai, meanwhile, offers a wide variety of choices. “Top-end ready villas include Emirates Hills, Palm Jumeirah, Al Barari and Jumeirah Golf Estates. Those coming soon include Dubai Hills, Mohammad Bin Rashid City, Bulgari Residences on Jumeirah Bay Island and XXII Carat Club villas on Palm Jumeirah,” says Cleator. “Ready apartments in the prime sector include Le Reve, Burj Khalifa and Palazzo Versace. Those to watch out include Volante in Business Bay, Alef Residences, Vizir Palme Couture, The One in Palm Jumeirah, Opera Grand, The 118, IL Primo in Downtown and the multiple Downtown The Address Residences.”