New report forecasts emirate to continue rally in second half of the year with growth between 6-7.9%
Dubai led the global prime residential market with a price growth of 11.2% in the first half of 2023, making it the top performer among 30 cities, ahead of Mumbai, Cape Town, and Bangkok. The forecast for the second half of 2023 also predicts Dubai to remain at the top with growth expected between 6-7.9%.
According to Savills’ Prime Residential World Cities Index, Dubai saw significant transaction activity with a total of 1,500 units priced above AED 4,000 per sq.ft. being sold in H1 2023, marking a growth of 67% compared to the same period last year.
While the global average capital values for the tracked cities grew by 1.1% during H1 2023, Dubai’s prime residential rents outperformed capital values, experiencing a growth of 2.6%.
Factors contributing to the limited availability of prime inventory in Dubai include rising construction costs, development challenges, and increasing debt costs, which are also driving rental prices upward.
Despite a slowdown in sales markets due to rising interest rates and muted global economic growth, prime residential price growth remained positive on average, with a forecast of 1.1% growth for the second half of 2023.
Dubai ranked fourth in rental growth for H1 2023 with gains of 5.4%, and its average prime rents have seen a significant increase of 62% since December 2020.
The average gross prime yield across the 30 markets remained steady at approximately 3% for H1 2023, with Dubai, Los Angeles, and New York having the highest yields at just below 5%.
Looking ahead, Savills expects rents to continue outperforming capital values for the remainder of 2023 and in the medium-term, as the demand for prime properties in Dubai continues to grow amid limited supply.