Is luxury real estate here to stay in Dubai?

For many, the appeal of Dubai is captured in certain superlative experiences - and serious buyers are spoilt for choice when it comes to investing in their dream homes. While the largest and highest elements add essential layers to the destination's luxury quotient, its most attractive offering is its unrivaled portfolio of luxury properties.

While this may not be immediately apparent in global rankings, broader trends paint a clear picture of Dubai's promising luxury real estate segment. According to the latest AfrAsia Bank Global Wealth Migration Review, for example, Dubai is home to 88,700 millionaires. Examining migration numbers in 2017, the report shows a 10 per cent year-on-year rise in millionaire residents moving to the emirate.

Makings of a luxury lifestyle

Equally, market research firm New World Wealth ranks the UAE among the top five countries for millionaire migration.

Compared to long-standing global luxury real estate hubs like London and Singapore, Dubai is relatively new to the segment, with foreign house ownership coming in to effect only in 2002.

Yet, in a short span of time, the emirate has invested in mega projects and infrastructure to deliver high-end, opulent lifestyles that today is the accepted Dubai standard. Luxury homes in the city are increasingly being built to transport people to the experience of their choice.

Along with the grandeur and choice, Dubai also offers unparallelled value for luxury properties. According to a Knight Frank's 2019 Wealth Report, a $1 million investment can buy 28 square metres of prime residential property in London, 22 square metres in Hong Kong and 25 square metres in New York. Compared to this, for the same budget, buyers can acquire 138 square metres of prime property in Dubai.

The business case

The emirate also favours foreign buyers with the absence of taxes and levies that are commonly seen in leading property markets.

Besides being a haven of luxurious homes and upmarket communities, Dubai doubles up as the region's most dynamic business hub. Just a two to eight-hour flight away from key cities in the Middle East, Europe and Asia, Dubai's offers unparallelled connectivity.

Adding to this, the Emirate recently introduced residency and company ownership laws that allow non-Emirati entrepreneurs a new wave of opportunity to set up and grow their operations.

Moreover, with large-scale events such as Expo 2020 on the horizon, business activity continues to grow, signalling further economic expansion. On the other hand, Dubai's Silicon Valley ambitions encapsulated in its numerous smart city initiatives, start-up incubators and accelerators, and sustainability reforms, are paving the way for new wealth to take root and flourish.

Positive market trends

According to brokerage firm Luxhabitat, the total value of transactions in Dubai's prime residential segment touched Dh39 billion in 2018. While this is lower than the previous year, the report confirms that a higher price per square foot indicates a rising demand for luxurious, quality properties.

The report also ranks Mohammed bin Rashid Al Maktoum City as the second best prime residential area in terms of sales volume.

In spite of the macroeconomic headwinds impacting most global markets, these trends reinforce Dubai's position as a luxury real estate hub.

Even as projects such as Obor come into being, the long-term potential for a shift in property investment from Europe and the Pacific Rim to a central, strategic location continues to gain ground and take shape.

The writer is chief marketing officer at Sobha Realty. Views expressed are his own and do not reflect the newspaper's policy.