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Dubai ranks first in luxury home sales in second quarter: report

Dubai was one of only four markets to see growth in its overall sales volume of luxury homes between Q2 2022 and Q2 2023 at 79%, along with Sydney (46%), Paris (17%) and Geneva (7%).
This image shows high-rise buildings in Dubai, on Feb. 18, 2023.

DUBAI — The luxury property boom has taken a hit as higher interest rates, which have raised borrowing costs, take their toll. Yet Dubai saw an increase in sales of $10 million-plus homes and had the highest global sales volume in this market, at $1.5 billion, in the second quarter of this year.

In a survey of 12 key international markets, the sale of residential properties above $10 million, or super-prime estates, fell 13% in the second quarter (Q2) from April to June 2023 compared to the same period last year, reported real estate consultancy Knight Frank in its Global Super-Prime Intelligence report released Thursday.

The total number of these luxury residential sales in the 12 months through June dropped slightly under $30 billion in the surveyed markets, dropping by about one-fourth of its value during that period in 2021 at $40.7 billion. 

This year’s numbers still highly exceed pre-pandemic sales, which hit lows of $18.6 billion in 2019 — although after 11 rate hikes until the present and with a federal policy rate that’s reached within 5.25%-5.50%, the luxury property market is feeling the burden.  

Dubai was one of only four markets to see growth in its overall sales volume of high-end residential properties between Q2 2022 and Q2 2023 at 79%, along with Sydney (46%), Paris (17%) and Geneva (7%). It also led the global market in Q2 with $1.582 billion in the sale of 95 properties and overall annual sales at 320 with a volume of $5.834 billion. 

New York was second with $1.142 billion of 67 sales in Q2, followed by London with $1.034 billion and 54 sales, and Hong Kong with $834 million in 42 sales. There were a total of 422 total sales during the quarter in the surveyed cities.

Dubai has been able to make this major leap to lead the market due to the influx of global wealth that has poured into the global city in recent years.

The United Arab Emirates, and with it Dubai, “established itself as a luxurious safe haven for wealthy expats and investors unwelcome in many jurisdictions, from crypto millionaires to affluent Russians fleeing Western sanctions,” reported Samuel Wendel, a senior market research analyst for Al-Monitor Pro, in May this year.

The UAE, along with other Gulf states, also maintained economic growth greater than the global average in 2022, uplifted by energy exports as the world felt the impact of the Russia-Ukraine war and the ongoing economic impact of the COVID-19 pandemic. This all helped to create a more welcoming environment for high-end homebuyers. 

The UAE attracted the highest net inflow of millionaires in the world last year, seeing the number of its residents with a net worth of $1 million or more increase by 5,200, according to the Henley Private Wealth Migration Report 2023. In contrast, China had the largest drop in its total number of millionaires, followed by the United Kingdom and then Russia.

Looking to the future of luxury home sales, global head of research at Knight Frank Liam Bailey anticipates an even lower global trade volume next year as the super-prime real estate market retreats from recent highs.

"The biggest constraint across a majority of markets in the near term is supply; a lack of new development starts between 2020 and 2022 means a lean 2024 for new delivery," Bailey said in the Knight Frank report. He added that this points to rising competition for available stock, which should act to put a floor under pricing. 

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