The Tetris-like Atlantis The Royal luxury development is among the newer landmarks on Palm Jumeirah, the artificial island that is home to Dubai’s elite. When the first of its 231 deluxe residences was offered for sale seven years ago, a two-bedroom apartment could be bought for a mere Dh5.5mn ($1.5mn).
But demand has soared since the pandemic, with owners inundated with requests to sell homes that come complete with swimming pools and terraces offering panoramic views. This summer, one of Atlantis The Royal’s penthouses, which sprawls over three floors, sold for Dh180mn.
“2020 and 2021 have been incredible years,” said Philippe Zuber, chief executive of Kerzner International, its developer. “Dubai was one of those global destinations managing the pandemic extremely well, so it put Dubai on the map.”
Atlantis The Royal’s popularity among buyers epitomises the boom in deluxe properties in Dubai as a new generation of rich residents competes over a shrinking pool of luxurious homes.
The influx includes Europeans seeking a sun-kissed, low-tax life; financiers fleeing Asia’s coronavirus restrictions; Indians putting down roots thanks to an attractive new long-term residency programme; and Russians flocking to one of the few havens open to them since the war in Ukraine.
Prices are set to continue rising next year, according to local brokerage Unique Properties, which has forecast a 13.5 per cent increase in the cost of prime properties in 2023.
The boom has trickled down to all segments of the market. Property group CBRE said residential transactions in the 11 months to November topped the record set in the same period of 2009 — just before Dubai’s debt-fuelled property bubble burst amid global financial crisis. Rents, meanwhile, have risen by more than a quarter over the same period.
Yet it is the top-end that has attracted the hottest competition. Emirates Hills, an area synonymous with Dubai’s uber-elite, has been hugely oversubscribed since the pandemic sent demand soaring, according to Leigh Borg, an executive partner at Luxhabitat Sotheby’s International Realty.
“Dubai has always attracted millionaires and billionaires, but now they’re moving here full time and they want the biggest and best homes,” said Borg, who has sold 10 properties in the area worth a total of Dh420mn this year alone.
Valuations in Emirates Hills were at all-time highs, he noted, while fewer than 5 per cent of its more than 600 properties were actually up for sale.
His offerings include an eco-friendly solar-powered contemporary villa in Emirates Hills’ most exclusive street priced at Dh349mn. “This is what the new wave of buyers are looking for: a turnkey solution, something ready to move in,” he said.
Yet older villas that can be renovated are also popular, with some doubling in value since the pandemic to sell for Dh110mn or higher.
The surge in demand from the wealthiest buyers convinced Dubai’s largest private sector developer Damac to pivot towards luxury offerings.
Hussain Sajwani, its chief executive, picked up on the shift last year, when homes at the group’s new Cavalli Tower were snapped up for Dh20m, and a penthouse there sold for more than three times this figure. He said that he expected properties in its new luxury project next to Dubai’s man-made canal to fetch up to Dh70mn.
Russians, who are often attracted to waterfront apartments, have become important customers, although more established European markets were still the largest customer segment. Yet Sajwani said he expected a new influx from China, as Beijing continues to grapple with coronavirus. “Our next boom will come from the Chinese,” he predicted.
Developers say the limited stock of upmarket properties will ensure that the boom is sustained, although new projects are expected to come on stream soon.
Foremost among them is the Palm Jebel Ali, another man-made island that is larger than the original Palm Jumeirah. Yet the project developed by government-owned Nakheel also offers a cautionary tale about the perils of property investment in Dubai.
Launched in the early 2000s, the construction of Palm Jebel Ali was put on hold during the financial crisis and then delayed until a judicial committee cancelled the project this year. It is now being relaunched under a new master plan that reflects today’s much-higher valuation. The first of hundreds of villas and thousands of apartments will go on sale as early as next month.
Hundreds of customers held on to their original contracts for years, hoping one day to move in. Others who purchased their units in the hot secondary market could lose millions of dirhams. A group of aggrieved investors have petitioned Dubai’s ruler for recompense.
“I’m bewildered they cancelled the project after 19 years and at the same time launched it again with a different name at [prices] five times higher than what they sold it for originally,” said Muhammad Azzam, one of those to launch a claim. “With this action, investor security loses its meaning in Dubai.”
Nakheel has said it is offering up to one and a half times the initial payment to invest in upcoming projects on the new Palm but that it will not refund sums paid in private transactions. “Settlements will . . . not be based on secondary market transactions which did not involve the company,” it said.