The Middle East business hub is the latest city to light up with what Knight Frank called “a spectacular post-Covid rebound in luxury home sales.” In the first five months of the year, 22 properties worth more than $10m found a buyer, the most since 2015 and up from a total of 19 last year. The rebounding of Dubai’s super prime market echoes a wider global trend, signalling the start perhaps of a ‘Roaring Twenties’ for global real estate. Most of the transactions in the highest price bracket were on the city’s artificial island of Palm Jumeirah, with a total of about $770m paid for properties in the $10m range between January and May. Economic activity in Dubai, particularly tourism, has rebounded in the past six months as the emirate rolled out one of the world’s fastest vaccination campaigns and opened its doors to foreign visitors sooner than most other countries.
Even as luxury property appears to flourish in Dubai, other parts of the emirate’s real estate sector are struggling. State-linked developers Limitless and Meydan are restructuring debt, while one of the top realty firms, Damac Properties, sought to de-list its shares after posting hefty losses. The founder of Damac postponed the effort this month when the regulator started a review of the transaction. And Dubai’s years-old property glut may also continue to put pressure on the value of high-end residential homes. With much of the city’s real estate still working through an oversupply that drove down values by over a third since 2014, it may be a challenge to sustain demand for luxury homes while the United Arab Emirates, of which Dubai is a part, struggles to bring down the number of coronavirus infections that has kept it on the UK’s red list. Dubai has over 42,000 homes valued at $1m or more, second only to London, according to Knight Frank. At the same time, prime residential properties are far more affordable in Dubai than in London, New York, or Singapore.