2023 was a complete historical breakthrough for the luxury market in Dubai at all levels as Record-Shattering Sales and Prices. The luxury market in Dubai experienced a monumental breakthrough in 2023, setting historic records across various metrics. Notably, the Como Residences Penthouse reached an all-time high, achieving a staggering 24,000 DHS per sq.ft. The luxury market's pinnacle was further accentuated by the sales of ultra-premium penthouses, with Marasa Al Arab fetching 410 million dirhams, Bulgari Lighthouse at 420 million dirhams, and the Como Residences at 500 million dirhams. Adding to this luxury showcase, a custom-built mansion in Palm Jumeirah was sold for an impressive 600 million dirhams, solidifying Dubai's position as a hub of unparalleled opulence and luxury.
Exponential Growth in High-Value Transactions
In addition to these record-breaking prices, the market witnessed a surge in high-value transactions, with 1,200 sales of apartments priced above 11 million dirhams. These transactions were spread across 150 luxury projects located in 10 major master communities in Dubai, reflecting a significant influx of luxury living seekers, many of whom are billionaires, indicating a robust demand and an expanding supply of luxury properties.
Reference: DXBinteract.com
Impact on Land Prices: A Testament to Luxury Demand
Prime Plot Prices Reach Unprecedented Heights (the sales transaction was signed during 2023 in December and transferred to DLD in Jan 2024): The escalating demand for luxury properties has profoundly impacted land prices, particularly for well-located prime plots. This trend was exemplified by a plot on the water canal, which sold for a record-breaking 1,700 DHS per sq.ft on the GFA, a price more than quadrupling from the pre-COVID average of 400 DHS per sq.ft on the GFA. This substantial increase in land prices is attributed to the transformative nature of real estate developments around the Dubai Canal, including prestigious projects like the Four Season, MrC, and other branded residences. The completed apartments in these developments commanded high prices, averaging 8,000 DHS per sq.ft, substantiating the premium land prices.
2024: Projections for New Luxury Landmarks
- La Mer and Al Wasl Villas: New Epitomes of Luxury: Looking ahead to 2024, the luxury real estate landscape in Dubai is poised for further evolution with the introduction of new luxury icons. La Mer is expected to unveil exquisite luxury mansions, with prices starting at 90 million dirhams and extending up to 400 million dirhams. As of the 10 of January 2024 two ultra luxury mansions have been exclusively signed for marketing and sales through fam Luxe, a specialized division within fam Properties, dedicated to catering to inquiries from sellers, tenants, and buyers for properties worth 11 million dirhams and above.
Al Wasl Villas is set to emerge as another prestigious community, offering approximately 140 private mansions situated in the heart of Dubai, between Jumeirah Beach Road, the Dubai Water Canal, Sheikh Zayed Road, Downtown, and Citywalk, promising a unique blend of luxury and prime location.
Additionally, Jumeirah Bay Island is set to welcome the delivery of more luxurious mansions, further cementing Dubai's status as a premier destination for luxury living.
Strategic Initiatives by fam Properties to Dominate the Luxury Segment
Substantial Expansion and Creation of fam Luxe: In response to the immense rise in demand for luxury properties, we executed strategic initiatives to capture a larger market share.
- fam-Luxe: Dubai luxury segment that had fewer than 10 major luxury branded residential projects pre-COVID went to well over 100 ultra-luxury projects launched during 2022 and 2023. This expansion led to the creation of fam Luxe, a new division aimed at catering not just to the current demand but also to the future demand from sellers, buyers, and tenants for properties priced from a minimum of 11 million dirhams up to 1 billion dirhams.
- NORDIC LUXE: A New Era in Ultra-Luxury Development: To further solidify its position in the luxury market, fam Properties introduced NORDIC LUXE, a real estate development license specializing in the development of ultra-luxury mansions with modern and minimal architectural designs, top-notch finishings, and prime locations. The first phase of our ultra-luxury mansions in the Al Wasl area, referred to as the Downtown villas of Dubai, is slated for completion and launch in March 2023, with prices starting at 70,000,000.00 Dirhams.
Key Observations for Dubai's Luxury Real Estate in 2024
- Anticipated Delivery of Ultra-Luxury Units: For 2024, the delivery of ultra-luxury units is expected to be moderate, suggesting that the equilibrium between demand and supply for ready luxury properties will likely remain intact.
- Increasing Off-Plan Ultra-Luxury Sales: The trend for purchasing off-plan ultra-luxury properties is projected to intensify as the demand for such investments continues to thrive robustly within Dubai.
- Future Sustainability Checkpoints: The sustainability of the ultra-luxury segment is set to be rigorously tested from late 2025 to 2027, particularly regarding the supply of newly completed ultra-luxury properties.
- Proliferation of Branded Residences: The narrative of luxury real estate in Dubai will increasingly feature the launch of new branded residences, as brand association is becoming a fundamental criterion for defining luxury within the market.
- Selective Success in Ultra-Luxury Developments: Navigating the Hype vs. Reality in 2023-2024: I anticipate the continuation of a significant trend from 2023 into 2024: while the luxury segment is flourishing and many ultra-luxury developments are setting records, it's important to note that this success is not universal. Some ultra-luxury projects have not garnered interest or demand from investors or brokers right from the outset. This lack of attention can primarily be attributed to a combination of factors, including overambitious pricing, less-than-ideal locations, misaligned brand names, ineffective branding, or flawed project launch strategies.
Dubai's 2024 Luxury Real Estate Market: A Speculative Bubble or Genuine Demand?
Upon close examination of the micro market fundamentals within Dubai's luxury real estate sector, there is a strong inclination to deem it a market driven by genuine demand rather than speculative activity. Notably, investment in properties valued above 15 million dirhams, especially those ascending to half a billion dirhams, is typically not speculative. High Net Worth Individuals (HNWIs) and billionaires, with their substantial financial capabilities and strategic long-term perspectives, are often the primary investors. Dubai has emerged as a steadfast destination for these affluent individuals to invest in trophy assets, thereby shifting market share from traditionally recognized safe havens such as London, New York, and Paris.
In the event of an exit by any billionaire investor, the market dynamic mandates that the asset would likely transition to another individual of similar financial stature. A look at major cities that attract trophy asset investors reveals a consistent trend: once a city is established as a billionaires' destination, it tends to retain that status indefinitely, regardless of global or local market shifts.
While a continuous increase in prices within the ultra-luxury segment is not foreseen, a consistent and stable number of sales transactions, particularly in the off-plan sector, is anticipated. Ultimately, the true measure of sustainability for any segment in the real estate market will be when the properties are completed and must stand up to the scrutiny of actual end-user demand.
Will Dubai's Ultra-Luxury Real Estate Set Unprecedented Records in 2024 and 2025?
In considering the forthcoming years of 2024 and 2025, while it remains challenging to precisely forecast record-breaking prices, it wouldn't be astonishing to witness ultra-luxury properties reaching the billion-dirhams mark. My prediction draws from the established cycles seen in mature markets globally. In a city like Dubai, where the infrastructure excels on a world-class level, the potential for billionaires to demand even higher levels of luxury knows no bounds.