Dubai’s luxury home prices rise the most in H1

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Dubai remains the global number one location for luxury real estate in 2023 as it recorded the highest price jump in luxury homes in the January-to-June period, compared to prices at the end of December.

Luxury home prices in the emirate rose 11.2 per cent to an average of $800 per square foot in the January-to-June period, ranking the city at the top among 30 cities that Savills tracks globally, while Hong Kong still has the world’s most expensive prime residential property.

Across the world, luxury home prices rose in the first half of 2023 by an average of 1.1 per cent in the first half of the year, the Savills World Cities Prime Residential Index for July 2023 reported. Savills defines luxury homes as properties priced in the top 5.0 per cent of the market in each city.

“The slowdown in sales markets – first recorded in the second half of last year – has continued into 2023, in the face of rising interest rates and muted global economic growth,” said Paul Tostevin, director, Savills world research.

PNC Menon, chairman of Sobha Realty, a leading luxury residential property developer in the region, said as a global hotspot for high net-worth individuals (HNWIs), Dubai continues to attract buyers and investors in droves by offering them one of the world’s safest and best luxury ecosystems. “A recent spate of investor-friendly reforms and liberal visa rules in addition to tax incentives and a stable economy make Dubai increasingly appealing as a destination of choice to the world’s super-rich and celebrities,” said Menon.

“Certain cities are expected to outperform, with Dubai forecast to lead the way with growth of between 6.0 per cent and 7.9 per cent expected,” said Tostevin. The rise in Dubai luxury real estate prices suggests that the city is a preferred location for wealthy internationals for both domestic and global business transfers.

The pace of the increase in Dubai’s luxury property prices in the first half was more than double that of second-placed Mumbai, which recorded a 4.3 per cent increase to $1,100 per square foot, followed by Cape Town’s 3.3 per cent expansion.

In the first half of the year, luxury home prices in the Asia-Pacific region saw the highest growth. Out of the 13 Asia-Pacific cities in the index, 10 experienced an increase in luxury real estate prices.

Hong Kong’s prime residential prices, at an average of $4,110 per square foot, are more than one-and-a-half times that of the second-most expensive market, New York at $2,670 per square foot, Savills said. In the first half of 2023, Hong Kong’s luxury home prices registered a 1.8 per cent rise, and for the rest of the year, they are likely to fluctuate between flat growth and a 1.9 per cent increase.

Tostevin noted that despite the slowdown in sales markets initially observed in the second half of last year, which has extended to 2023 due to increased global interest rates and a stagnant global economy, the prime residential price growth remains optimistic.

In Europe, out of the 11 cities surveyed, seven experienced increased luxury home prices during the first half of the year, while Miami was the only city in the US to experience a rise – it reported a 1.1 per cent increase.

On an annual basis, however, a 1.9 per cent rise in overall luxury homes was the slowest since December 2020, Savills said. Nine cities including Shenzhen, New York, Paris and Seoul, meanwhile, saw luxury home prices decline by between 0.6 per cent and 3.7 per cent. London was the only city where luxury home prices were unchanged in the period.

The slowdown is mainly attributed to rising interest rates in markets such as the United States, the euro zone, Singapore, Hong Kong, Australia and Thailand, among others.

“Buyers are less active amid rising interest rates and a lack of high-quality stock,” the study said. “Best-in-class assets continue to perform well, however, creating an opportunity for new developments in this segment of the residential sector.”

Cities in the Asia-Pacific region recorded the “strongest levels of prime price growth”, with 10 out of the 13 cities in the region tracked by the index reporting positive price growth. Besides Hong Kong, Mumbai, Singapore and Bangkok, other Asia-Pacific cities that registered higher luxury home prices were Sydney, Tokyo, Shanghai, Guangzhou, Hangzhou and Beijing.