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Dubai's market share for luxury real estate is expected to double in 2022.

Due to a shortage of prime and ultra-prime residential units that can accommodate the rising demand from both end-users and foreign buyers, experts predict that Dubai's luxury real estate market will continue to grow in the second half of the year.

High net worth individuals (HNWIs), millionaires, and business owners looking to relocate or purchase a second home in Dubai have increased demand for prime and ultra-prime properties in Dubai since the beginning of the year, according to industry experts, analysts, and market experts.

Referring to a recent report, they stated that 4,000 HNWIs are anticipated to move to the UAE this year due to the nation's success in managing the Covid-19 pandemic, hosting Expo 2020 Dubai successfully, providing excellent connectivity and 100% foreign ownership of businesses, as well as introducing a variety of visa reforms.

They added that the conflict between Russia and Ukraine is bringing money and investments from the affected areas to Dubai.

The prime and ultra-prime residential market has been more resilient than the affordable and mid-market segment between 2014 and 2020, according to Prathyusha Gurrapu, head of Research and Advisory at real estate consultancy Core.

"Since the fourth quarter of 2020, there has been a noticeable rise in demand for luxury residential properties. In fact, secondary market transactions above Dh10 million reached their highest level in 2021, with Palm Jumeirah accounting for almost 35% of these transactions "said Gurrapu.

The first quarter of 2022 saw continued strong demand for prime residential properties, she said, with prime transaction volumes above Dh10 million being 140.2% higher than the corresponding quarter of 2021.

She went on to say that during the January to March quarter this year, 483 deals worth more than Dh10 million were signed, as opposed to 201 during the same quarter last year.

According to Gurrapu, who spoke to Khaleej Times, "Villa transactions exceeded apartments as 305 villas and 178 apartments were sold in first quarter of 2022 compared to 150 villas and 51 apartments in the same quarter last year as the demand for the luxury market is stemming from both end-users and overseas investors,"

According to Core's first-quarter report, prime waterfront property in Dubai is competitively priced compared to most major global cities, even though prime residential prices are still well below 2014 levels.

The lack of inventory in the secondary market has driven more interest toward the prime off-plan market, which has seen extremely high transaction volumes compared to prior years and the ready stock in this segment taken up by HNWIs. Recent high-end product launches are reflecting this trend and have experienced strong demand, it continued.

The report also stated that although the prime market is experiencing a record number of transactions, it still only accounts for a small portion of the overall Dubai housing market. However, according to experts, the market for luxury real estate will double this year as more investors show interest in the sector.

"To give perspective, transactions above Dh10 million formed only 3.3 per cent of all the secondary market transactions and 1.4 per cent of all the off-plan market transactions over Q1 2022," according to a Core report.

Prime and ultra-prime real estate have a bright future, according to Imran Sheikh, founder and CEO of BlackOak Real Estate, because of the rising demand from foreign buyers.

"We see strong demand and the trend to continue as more high profile and HNWIs move to the region. As the supply of good quality, well-designed, modern state-of-the-art properties is limited, the demand will outstrip the supply in the short term," said Sheikh.

According to Zoom Property CEO Ata Shobeiry, the substantial numbers generated by the luxury real estate sector in 2021 and the first half of 2022 have attracted investors, who will be crucial to the expansion of this market in the second half.

"With more developments featuring high-end properties backed by ultra-modern amenities, we can expect the second half of the year to produce even better figures," Shobeiry told Khaleej Times.

In response to a question, he stated that both investors and HNWIs have been drawn to the luxury real estate market. But with new visa regulations scheduled to go into effect in September 2022, "we will see more overseas investors" entering the market.

"As luxury properties are dominating the real estate sector, they will attempt to leverage the situation. This will play a positive role in sustaining the demand for luxury properties while benefiting the overall property market," he said.


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