Why Dubai’s luxury real estate market is a haven for investors

Dubai’s luxury real estate market has historically been attractive to international investors and 2023 is expected to be yet another year of continued demand from international high-net-worth investors.

There has been a combination of factors that has provided an impetus to the significant inflow of private wealth for luxury properties over the last year.

Global disruption has significantly seen a flight of capital from CIS countries and coupled with the UAE emerging faster than other countries from the Covid-19 crisis, so Dubai’s real estate has proven to be a prime benefactor.

Additional factors driving Dubai’s luxury real estate

Additional factors driving optimism include Dubai being recognised as the luxury capital of the world. This is due to global connectivity through its world-class airport, favourable lifestyle, and the attraction of property ownership providing the opportunity for Investor or Golden visas.

‘Informed Wealth’ is the term used for investors who have access to advisory services. They are able to make informed decisions based on global trends, tax advantages, and the comparative value of a luxury lifestyle in a safe environment.

The luxury end of the property market also tends to be less exposed to concerns about increased borrowing rates. This is because the ease of doing business has seen a flow of entrepreneurs identifying with Dubai as one of the most desirable cities to live and work in.

The luxury property market has shown no signs of slowing since it surged in 2021, and indeed it is the luxury offerings that have recorded favorable capital appreciation, with square-foot pricing for luxury developments now witnessing Dhs5000 as the new benchmark. Palm Jumeirah, Dubai Marina, Downtown Dubai, Business Bay and Jumeirah Bay remain in high demand among international investors.

Branded residences have contributed to Dubai’s association with luxury living, and there are already over 50 branded projects in Dubai, ready to be delivered in two to three years.

The attraction of branded residences enables developers to enhance their bottom line and buyers recognise the value-add of brand association, particularly if that brand is providing a luxury hotel experience, facilities, and branded furnishings.

Aside from the Ritz Carlton, Dorchester Collection, Bvlgari, St Regis, and many other hotels that offer superior lifestyle benefits, numerous luxury hotels offer concierge services, bespoke limousine service, private yacht charter, spas, health clubs, fine dining, and other services as well.

Typical buyers average between 25 and 50 years with branded and furnished apartments in high demand, drawn to the luxury offering through the off-plan payment structures, which developers have made extremely attractive, whereby as much as 50 per cent is payable at handover and in some cases post completion payment structure.

As a result, buyers are able to strategise their wealth distribution, be less dependent on borrowings, and adapt to foreign exchange and cryptocurrency fluctuations.

Whilst current Dubai real estate pricing is arguably high in a historical context, the market is witnessing record-sale levels with I have every reason to predict that prices will increase further over the coming years, with prices being comparable to other major international cities – Dubai is unstoppable!

Phil Sheridan is the chief executive officer at Berkshire Hathaway HomeServices Gulf Properties

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