The exceptional demand for Dubai’s real estate market during the post-pandemic period has been driven by the high-end luxury category. High net-worth individuals from emerging economies like Western Europe and the US have flocked there to take advantage of the low rates and high profits, driving prices to record highs over the past two years.
The luxury real estate market’s environment has changed significantly. Only a small number of properties would cost more than Dh35 million a few years ago. But as wealthy people have been actively looking for safe havens that can safeguard and enhance their investments, and provide them and their families with a truly world-class lifestyle, high-quality education, and other facilities, penthouses in Dubai have recently set the tone for the growth of ultra-luxury real estate, with one of the units in Bugatti Residences by Binghatti reaching Dh750 million. And for the affluent, Dubai checks all of those boxes.
Without question, penthouses are seen as a status symbol and a prized possession. Global investors are still showing a lot of interest in Dubai’s upscale real estate options. In addition to being a renowned address, they also provide inhabitants with stunning views of the city and some of the most opulent amenities and services, enhancing their quality of life.
According to Petri Mannila, head of luxury at Penthouse.ae, there is a shortage of luxury properties in Dubai due to the high demand for these properties brought on by the high level of uncertainty in wealthy nations.
“We have seen over 75 percent of our buyers relocating permanently to Dubai, viewing the city as a safe and stable place to live and work. We are witnessing very strong demand for ultra-luxury properties from Europe’s traditional prime source markets and the CIS. We are also just beginning to see the return of investors from previously closed markets like China and greater interest from UHNWIs from the Americas,” says Mannila.
Institutional investors and family property funds, in addition to high-net-worth individuals and business owners, are fueling demand for luxury residences exceeding Dh20 million, which is causing a lack of available units for both end-users and investors in the market.
“Also, there was a freeze in new projects during Covid-19, which caused a shortage of these luxury properties. However, new units are now entering the market to cater to the tastes and requirements of their owners.”
Developers tapping penthouses
Since there is still a great demand for penthouses, developers are increasingly turning to this area to supply luxury apartments.
According to Nabni Developments, a renowned real estate development firm with headquarters in Dubai, Avenue Residence 5 will have penthouse flats for the first time in Al Furjan.
“Al Fujran is increasingly getting more premium and demand. It is the area targeted by families looking for future homes and proximity to many signature locations or attractions,” said Khalid Al Jaziri, chief commercial officer, Nabni Developments.
“We are thrilled to introduce penthouse units in this vibrant community, offering an elevated lifestyle to our discerning residents. We believe Avenue Residence 5 will set a new standard of excellence in the real estate market,” said Al Jaziri.
Developers are responding to the growing demand by adding more luxurious and unique facilities to their developments in order to satisfy their high-profile clients. Most penthouses also offer breathtaking panoramic views of the city in addition to providing its residents with the utmost safety, security, and privacy. these include, in some cases, private elevators, pools, and access from parking and lobby, as well as concierge services, valet parking, and so forth.
Who is buying and where?
The cost of a penthouse typically ranges from Dh5,000 to Dh15,000 per square foot, depending on the amenities and other luxuries included in the space.
“We have seen a mix of nationalities purchasing these super-luxury penthouses. There is greater interest from Indians for properties around the Downtown area while Europeans, Russians and Emiratis tend to pick up penthouses with beach access,” added Mannila.
Penthouse.ae just broke the record for the highest price per square foot for a property on Palm Jumeirah, serving properties valued at Dh15 million and above. The deal, at Dh 12,387 per square foot, was the second-highest in Dubai, trailing only an apartment sold for Dh13,543 per square foot in the Bulgari Resort and Residences. For Dh44 million, a three-bedroom duplex flat in the Royal Atlantis was sold.
The Palm Jumeirah, Dubai Marina, Downtown, Bulgari Residences in Jumeirah Bay, and Marsa Al Arab are a few of the emirate’s most sought-after locales for penthouses.
Most of the penthouse buyers, as expected, are end-users, although there are a small number of investors seeking to capitalize on Dubai’s luxury market segment, which has grown by over tenfold since 2020. “In fact, in the first half of this year alone, we have nearly matched the total number of deals in the $10 million-plus segment compared to the whole of 2022,” added Mannila.
The price rises in direct proportion to demand. This is a perfect fit for Dubai’s premium real estate market, particularly penthouses and villas. Due to the two categories’ already significant price increases, the trend is anticipated to endure for the foreseeable future as long as demand is unabated.
“With supply constrained and prices maintaining an upward trajectory, the current window of investment opportunity is exceedingly promising. Dubai’s luxury property market has witnessed substantial double-digit growth in the first half of this year, with a positive outlook forecasted for the next 3-5 years,” concluded head of luxury at penthouse.ae.