According to the report, the Dubai real estate market has recently shown strong growth, as the emirate ranked 4th in the world in terms of the growth in the cost of luxury housing in the first half of 2022.
Prices for luxury real estate in Dubai increased by 4.7% during the first half of the year, compared with an average of 2.4% in 30 cities, reflected in the Savills Prime Residential Index: World Cities.
According to a study by Savills, US cities dominated the leaderboard, and Dubai, the only city outside the US to make the top five, ranked fourth in terms of capital appreciation. The US cities included in the top 5 are Miami, Los Angeles, San Francisco and New York. Seoul, Lisbon, Cape Town, Berlin and Milan were also included in the top 10 cities of the index.
In Dubai, prices for primary real estate increased by 4.7% during the first half of the year, and, according to forecasts, significant capital growth will continue in the city until the end of 2022. Meanwhile, in the 30 cities covered by the Savills index, the cost of capital increased by an average of 2.4%.
It is expected that due to the influx of wealthy people and the success of the Golden Visa program, the UAE - and, consequently, Dubai — will continue to attract wealthy people at a level exceeding the level that existed before the pandemic. Henley & Partners predicts that in 2022, the UAE will accept 4,000 millionaires moving to the country, which is four times the pre-pandemic rate of 1,000 people per year. The Emirate continues to invest in the infrastructure of the city, improving its opportunities for recreation and tourism in order to preserve and attract talent and business.
Along with other top cities Miami, Lisbon and Cape Town, Dubai has benefited from being re-evaluated for its warmer climate, higher quality of life and increased desire for more space.
Miami ranks first in terms of growth in the cost of fixed assets in the first half of 2022, recording a six-month growth of 12.5%. Lower taxes and a high quality of life stimulated migration from other areas of the United States, contributing to the success of the city. Cities in North America showed the highest rates in 2022, followed by cities in Europe.
Most of the world's cities are being affected by geopolitical uncertainty, rising inflation and rising interest rates, although this has not yet had a significant impact on pricing in major markets, the report says.
Helen Tatham, head of real estate at Prime Residential Dubai, said: “Our research predicts that the growth in the cost of capital in all 30 cities of the world that we track will average 2.2% in the second half of 2022, which is slightly lower than the 2.4% recorded in the first half of the year. Dubai will show the highest rates until the end of 2022, and factors that work in its favor include constant positive policy changes, the most recent of which are additional benefits for long-term visa holders, as well as the opportunity for residents to have a higher quality of life at hand. In addition to the sharp increase in the number of wealthy expatriates choosing Dubai as a new place of permanent or partial residence, there is a growing trend that existing residents in the long term view Dubai as their main home.”
Rental costs: Rental growth for luxury housing outpaced the growth in the cost of capital in the first half of 2022, increasing by an average of 3.1% according to the Savills World Cities luxury housing index on the background of an increase in the cost of capital by 2.4%.
A shortage of supplies and pent-up demand after migrating to cities with the reopening of international borders at the end of 2021 continued to drive growth. The revival of corporate travel, buyers "try before they buy," and the prioritization of housing through more remote work are all factors driving growth in the luxury rental markets in the world's leading cities.
In Dubai, rents rose rapidly, benefiting from broader lifestyle trends seen in other markets, amounting to 5.3%. In an earlier study by Savills, the emirate also ranked third in the world among the best places for business travelers, which was facilitated by an extensive visa program, a favorable climate, excellent transport interchange and a developed luxury housing market.
Having increased by 8.5% in the 1st half of 2022, New York has reached record high rental rates in history, due to a shortage of inventory and demand for large areas for which tenants are willing to pay a premium. It was followed by Singapore, London, Lisbon, Miami and Los Angeles, all up 5.5% or higher.
As for profitability, the most profitable cities were Dubai, New York and Los Angeles - more than 4.5%, although they have increased since June 2021. For comparison, in the six months to June 2022, the average gross primary yield for the 30 cities included in the Index remained at 3%.
Swapnil Pillai, deputy director of Middle East Research, said: “The prospects for rent growth for luxury housing remain positive, as the type of apartments demanded by tenants continues to be in short supply. For those who want to familiarize themselves with the location or housing before taking on long-term and often expensive commitments, renting continues to be a practical, albeit short-term solution.”
0 comments