Dubai among top cities to see high growth in prime residential property in 2024

Dubai among top cities to see high growth in prime residential property in 2024

Dubai continues to be the hottest prime residential property market, with capital values increasing 17.4 percent for the year, with a more modest 5.6 percent recorded H2 2023, revealed Savills Prime Residential World Cities Index.

This performance is recorded against an average price growth of 2.2 percent across 30 global cities covered in the company’s Prime Residential World Cities Index.

The (Dubai) market is still relatively competitively priced by global standards, at $850 per square foot, offers a comparatively low cost of living, a relatively easy visa process, and a warmer climate, which continues to attract international and domestic buyers, Savills researchers said in the report.

Other Asia Pacific cities led capital value growth in 2023, with Mumbai leading the pack.

According to the report, some cities felt global economic turbulence more than others, particularly in the second half of 2023.

New York and San Francisco, with the former seeing a muted return to office and the latter still weathering tech-turbulence, recorded some declines for the full year.

Hong Kong’s ongoing political and economic uncertainty continued to hamper its prime residential markets, with capital values falling 3.7 percent over the year.

Looking ahead into 2024, capital values for global cities will remain in positive territory, the report showed

Prime residential price growth of a modest 0.6 percent is forecast across the 30 global cities monitored, down from the 2.2 percent achieved in 2023.

“In the face of ongoing economic uncertainty and a higher interest rate environment, prime residential markets in world cities were muted in 2023 following two years of significant gains. Growth is forecast to slow further in 2024 as markets return to more normal conditions, but will broadly remain in positive territory,”

said Kelcie Sellers, associate, Savills World Research.

Sydney vs. Dubai: Who will be the top performers?

Sydney and Dubai are forecast to be the two top performers for the year ahead, with both cities set to benefit from increases in their high-net-worth populations.

Sydney is seeing high levels of demand for quality prime homes, but supply remains low. This imbalance will likely persist through 2024 and push up prices, which are forecast to increase by 8-9.9 percent.

Dubai increased by a significant 17.4 percent over the year, but this rate of growth will likely slow this year as it returns to more normal activity.

Savills anticipates prices to grow in the emirate by a further 4-5.9 percent.

Suffering from weaker sentiment associated with higher interest rates and the challenging economic backdrop, the prime residential markets of Los Angeles, New York, San Francisco, Seoul, London, Singapore, and Hong Kong are all forecast to see price falls this year.

Sellers says,

“We expect it to be a year to watch the markets globally. Countries that account for approximately 40 percent of the global population will go to the polls this year, and housing will likely be front of mind for many voters and policymakers alike. The potential for central banks to also cut interest rates during mid to late 2024 may also boost activity across prime property markets and could surprise on the upside for pricing in the latter part of the year.”

Who leads in rental performance and yield?

  • Dubai also recorded rental price increases during the year at a little under 10 percent, versus the average 5.1 percent recorded among other global cities in the Savills index.
  • Lisbon led prime rental growth among the 30 cities in the index, increasing 39 percent last year.
  • In terms of yields, Dubai stands out as a high-yielding city by world city standards, with returns of 4.8 percent.
  • Across all world cities, prime gross yields stood at 3.1 percent as global rental markets recorded stronger growth than the sales markets.
  • The cost of buying, holding, and selling a property in Dubai is also among the lowest, at less than 10 percent of the property purchase price, versus 15 percent cent, on average, across the 30 global cities.

News Source: Gulf Business

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