Prices of luxury homes in Dubai surged 48% in past year

04 September 2023 2 min. read

The prices of luxury homes in Dubai surged again in the past year, seeing Dubai maintain its top position in Knight Frank’s luxury property prices index for the eighth consecutive quarter.

Prices of luxury homes in Dubai jumped by 48% in the 12 months to June of this year, reaching a total increase of 225% since the pandemic low in Q3 2020.

Globally, average annual luxury homes prices rose 1.5% across the 46 markets covered by the index. This marked an improvement from the prior quarter with 57% of cities experiencing price increases.

The Knight Frank Prime Global Cities Index Q2 2023

The surge comes on the back of a number of factors. Dubai’s property market has been immensely helped by strong economic activity, and government initiatives such as residency permits for retirees and remote workers.

In addition, the relaxation of travel restrictions post-Covid-19 has driven investors to return to the Dubai property market, with much activity closed by financial groups as opposed to individuals.

Notably, the largest driver is according to Knight Frank the influx of wealthy Russian buyers, who flocked to Dubai as a safe haven following the outbreak of the Russia-Ukraine war and Europe’s ban on Russian transactions.

Following Dubai, Tokyo and Manila secured the second and third spots with price growth of 26% and 20% year-on-year, respectively. Other cities in the top 10 included Miami, Shanghai, Mumbai, Madrid, Nairobi, Lisbon and Bangkok.

India had two cities in the top 30 list. Mumbai recorded the sixth highest year-on-year price growth, Bengaluru ranked 20th, while New Delhi can be found on the 26th spot.

In the second quarter of 2023, 14 cities saw price declines with Wellington, Frankfurt and San Francisco experiencing significant drops. Other major cities with annual price declines in the third quarter included London, Hong Kong, Los Angeles and New York.

Prices of luxury homes in Dubai surged 48% in past year

Knight Frank predicts that Mumbai and Auckland will lead the highest change in prime residential prices in 2024, both expected to see a 5% increase. Factors like improving GDP figures, relative value and infrastructure investments will drive these price increases. The average price for 26 global prime residential markets is expected to grow by 2% in 2024, meaning Dubai’s market is expected to cool off from its 2022 and 2023 highs.

Knight Frank's global head of research, Liam Bailey, noted that global housing markets are still influenced by higher interest rates but highlighted strong demand, limited supply due to pandemic-related disruptions and the return of workers to cities as factors supporting prices.