DUBAI is the world’s busiest luxury property market behind New York, Los Angeles and London after a deluge of wealthy investors flocked to the city when it emerged as a safe haven amid geopolitical and economic uncertainty elsewhere. 

The Middle Eastern business hub racked up 219 sales of properties worth US$10 million (RM44.85 million) or more last year, according to property consultant Knight Frank LLP. By comparison, New York registered 244 deals worth US$10 million or more, Los Angeles, 225 transactions and London, 223. Dubai was also the fifth most active city for sales worth US$25 million and above with 26 transactions. 

“Dubai has arrived,” said Faisal Durrani, head of Middle East research at Knight Frank. “The growing concentration of wealth in the city has been catalysed by the confluence of factors, ranging from the government’s decisive response to the pandemic, to the roll-out of a range of new residency visa options.” 

Demand for Dubai property is booming as the government’s handling of the pandemic and its liberal visa policies attract more foreign buyers. The luxury end of the emirate’s real estate market — including waterfront villas on the city’s man-made palm-shaped islands — is benefitting from an influx of wealthy investors such as Russians seeking to shield their assets, crypto millionaires, bankers fleeing strict Covid restrictions in Asia and rich Indians seeking second homes. 

The city is also emerging as a favoured destination for hedge fund traders who are drawn by its ease of doing business, tax-free status and allure as a global travel hub. Just over one-third of ultra-high-net-worth individuals (UHNWIs) in the Middle East grew their wealth in 2022 by more than 10%, according to Knight Frank. 

Still, Dubai is one of the world’s most “affordable” luxury home markets, ranking 16th in Knight Frank’s 20 global prime residential markets. In today’s market, US$1 million will secure 1,130 sq ft (104.98 sq m) of residential space in prime districts such as the Palm Jumeirah, Emirates Hills, or Jumeirah Bay Island – four times more space than in New York, London, or Singapore. 

And the boom isn’t showing any sign of slowing. The price of Dubai’s most luxurious homes are expected to increase the most globally this year — at about 13.5% after surging 44% last year, according to the consultant. 

“Dubai’s market still represents outstanding relative value,” said Andrew Cummings, head of prime residential at Knight Frank. “It is this value that continues to drive UHNWI buyers into our market, most of whom are seeking a sun-sand-sea lifestyle that is now synonymous with Dubai. The city’s appeal stretches right across the world.” 

The number of cash buyers in Dubai is also increasing. In 2022, about 80% of property transactions by value were in cash in Dubai, compared with 40% in 2021 and 50% in 2007, according to Durrani.

Russians were the biggest international buyers of Dubai real estate last year, Dubai-based brokerage Betterhomes said in January. 

Meanwhile, New York has surged past London as a pricier location to purchase prime residential real estate, according to new data from Knight Frank’s annual wealth report. In 2022, US$1 million bought 33 sq m (355 sq ft) of prime property in New York and 34 in the UK’s capital city — a change from 2021, when London was the more expensive location. 

“The strong dollar had an influence and boosted New York’s position, but prime prices in New York were up 2.7% last year and 1.5% in London, so we’re seeing slightly slower growth in London,” says Kate Ever- ett-Allen, global head of residential research at Knight Frank, who adds that properties in both markets are attractive to ultrahigh net worth buyers as an inflation hedge. 

“The volatility in other asset classes like equities and crypto are highlighting the appeal of prime property, especially in safe locations like London and New York,” she says. 

Monaco kept its title as the most expensive residential market, with US$1 million bringing buyers just 17 sq m, according to the report. Hong Kong followed with 21 sq m, with New York coming in third. Some of the cheapest cities highlighted in the report were Sâo Paulo, at 231 sq m, and Cape Town, at 218 sq m. — Bloomberg 

• This article first appeared in The Malaysian Reserve weekly print edition