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Even as the overall real estate market in Dubai witnesses a softening of prices, the demand for luxury homes is not showing signs of slowing down. Developers have launched new projects and despite the dip in oil prices, there seems to be no dearth of capital in the market. Alexander Von-Sayn Wittgenstein, Luxury Sales Director of Luxhabitat, shares his thoughts on the emerging trends.
Current luxury home market
There is a general lack of good quality products, but the Dubai real estate market is only recently making attempts to cater to the luxury real estate segment.
There have been cases where an upgraded Signature villa on The Palm gets sold for Dh68 million, whereas the neighbouring villa sells for around Dh35 million. This was just because the owner has renovated the Dh68-million villa to a very high extent and had furnished it tastefully.
Capital does not seem to be a problem; however, there is a lack of quality, upgraded properties. There is enough capital in the market to absorb any good quality ready products.
Dubai is a place where a lot of people also buy second homes and will rather pay more for a tastefully upgraded property than having to do the renovation themselves.
There is a trend among developers to deliver shell and core units, giving the client the opportunity to choose the materials and colour schemes of their preference. One of many examples is the Dubai Hills development, which is considered a successor of Emirates Hills, where the developer delivers the shell and core structure and the house can be finished to the customer’s liking.
Developers should offer complete solutions to the clients who buy shell and core properties and finish the units to their liking instead of the client having to look for a contractor themselves as some of them are not aware of the local proceedings and would rather pay extra for the ready, delivered customised product.
The rental returns for luxury properties are generally around 3%. Usually, luxury real estate locations such as Emirates Hills and Palm Jumeirah or penthouses are bought for end-use not for letting out.
A striking advantage of luxury real estate is the uniqueness of the product and its stable pricing even in times of recessions. You do not have to compete with 50,000 other one-bedroom apartments if you want to sell your Palm villa since there are only around 600 of them. The owners of such assets are usually financially healthier than the owners of the aforementioned one-bedroom apartments and the prices, therefore, remain more stable.
Popular luxury home destinations
The Downtown Dubai area near the Burj Khalifa is the area of the moment, with a large potential for luxury real estate in my opinion. Every new project gets sold out within hours which has to do with the fact that the master developers in the area have a good track record as they have always delivered their products even in difficult times and people know what they are getting.
As mentioned before, there is a big lack of luxury products in the market and unfortunately, we have not seen many more exciting products entering the market.
Palm Jumeirah is, so far, the only beachfront development where foreigners can buy; however, the number of properties is limited, which is, of course, one of the reasons for its popularity. The growth of the area will continue with a shopping mall in the area, which will give The Palm a completely different living and lifestyle experience since it is going to make it a complete community on its own.
Nurai is a private island just off Saadiyat Island. It consists of 12 water villas and 10 large estates. The boutique hotel managed by Zaya Retreats is also offering services to the privately owned villas, which makes it very convenient. The houses have between 10,011 square feet and 18,000 square feet of built-up area and sit on plots between 20,000 square feet and 100,000 square feet, making them unique. The prices start at Dh25 million and go up to Dh55 million for the estates.
Top real estate buyers in Dubai
The Dubai Land Department’s recent figures for the first quarter of 2015 suggest buyers from the Gulf Cooperation Council (GCC) region accounted for the biggest share of the property transactions in Dubai. Among the GCC nationals, Emirati buyers are topping the list followed by Saudis and Kuwaitis. Indians remain the biggest non-Arab buyers of properties in Dubai. During the first three months of the year, more than 1,000 Indians invested a combined amount of Dh3.04 billion in various properties. They are followed by nationals from the United Kingdom and Pakistan.
Source: S. Dhar, Special to Freehold