Dubai’s luxury real estate thrives among upheaval

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Villa prices start at AED14m in Dubai's Emirates Hills development

Villa prices start at AED14m in Dubai's Emirates Hills development

With opulent mansions and high-rolling residents, Dubai’s Emirates Hills development is fast becoming the city’s ‘Millionaires Row’, with analysts reporting properties have held their value.

The gated community, where villas prices start at AED14m, suggests Dubai’s luxury property market has been less impacted by the city’s dramatic real estate crash than midmarket homes.

[Click here for details of the UAE’s ultra-luxury homes]

“Emirates Hills has developed a reputation as a prestigious community,” said Renan Bourdeau, managing director of real estate website propertyfinder.ae. “The limited stock, build quality and large plots have helped keep prices way above those seen on the Palm and in Jumeirah.”

Ultra-luxury markets, whether in retail or property, often perform well during economic upheaval as super-rich investors continue to spend despite the wider slowdown. In real estate, this is partly because the mortgage slowdown doesn’t impact wealthy investors, who may capitalise on depressed property prices to bolster their assets.  

Mario Volpi, head of sales at Dubai property consultancy Cluttons, said the exclusivity of properties is a good gauge of their popularity during a downturn.

“Agents don’t have these kinds of properties on the market every day, [and] there are high-net worth people coming through and a lot of locals in this price bracket,” said Volpi, who has an Emirates Hills villa priced at AED60m on his books.

Villa owners in the development include the family of the late Pakistani president Benazir Bhutto, founder of THE One interiors store, Thomas Lundgren and Indian petrochemicals tycoon Yogesh Mehta.

“[We’ve had interest from] very high-net-worth individuals. Qatari and Saudi buyers linked to oil, they have spare money,” said Volpi.

The development is particularly popular among rich buyers from emerging markets in Asia and Europe, said Ghassan Ghellal, head of business development at Halcon Properties.

“It’s increasingly popular with cash-rich millionaire and billionaire expats from India, Pakistan and Russia,” he said.

Dubai saw less than 1,700 real estate deals in the first ten months of the year, government data showed, a 70 percent decline on sales made at the housing market’s peak in mid-2008.

Some 1,603 deals were signed off in the ten months to October, down from 5,363 during the same period in 2008, data from Dubai Land Department showed.

Analysts have warned the Gulf state risks developing a two-tier property market where prime properties hold their value, and midmarket units prove increasingly difficult to rent out or sell.

In a research note last month, Cluttons said units in poor locations with limited access to amenities and poor finishes would see ongoing declines in value.

“[Such properties] are falling further in demand and this ultimately reflects in lower values,” the report said. “The supply-demand gap is still apparent in less desirable locations and unfortunately this will be around for some time.”

Some 5,000 new homes are expected to hit Dubai's market by year-end, property consultancy Jones Lang LaSalle said in a recent report, with a further 27,000 seen in 2012.

Prices for properties in sought-after locations, such as Emirates Hills, Palm Jumeirah and Dubai International Financial Centre, fared better in the third quarter, Asteco said, with units largely holding their value. Sales prices and rents for villas declined 1 and 4 percent respectively, largely in response to the summer lull and Ramadan.

Property prices in Dubai soared after the city opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments.

From start-2007 to mid-2008, prices rallied almost 80 percent, Morgan Stanley estimates showed, with billions of dollars worth of new projects launched by local developers.

But the global financial crisis burst the emirate’s property bubble, wiping more than 60 percent off house prices in the city and sending speculators fleeing from the market.

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Posted by: Red Snappa

Yes indeed the best property market fundamental of all, is precious few of those Emirates Hills mansions were built, they reside on massive plots and even fewer are up for sale. It is a great pity that this principle was not applied to the rest of Dubai.

Nevertheless, like exclusive areas of London prices will remain fairly stable because there is no movement. Emirates Hills is the new Jumeirah, where all the wealthy Emirati's lived onced upon a time, plus a house out toward Al Ain.

As I recall the packing density of properties on the Palm was at least doubled from the original plan. There continues to be a monstrous oversupply of property despite the supposed annual 5% increase in population, which has no verified source to my knowledge.

The deliveries continue prime example Nakheel, Deyaar, Al Fajer, etc, however everything that was constructed todate apart from International City and Discovery Gardens was aimed at mid to upper middle income earners so 8% of the 5% can afford it!

Posted by: J J

Is this meant to be some sort of revelation in the world of real estate?! Hold the front page....."Ultra-rich people continue to buy ultra-expensive homes!"
It would be absurd to uses Emirates Hills prices as a measuring tool for the 'real market' where the majority of people can realistically afford to buy (albeit through the aid of financing).
Of course the market has developed sub-markets within the whole market, the same thing happens all over the world.
Birdie, can you use your own advice & verify the population growth statistics from a reliable non-biased source?

Posted by: Birdie

An objective article after a long time. Even the headline is pretty balanced.
Clearly the media is dropping its negative stance against the Dubai property market . Soon they will no option but to project reality and turn positive.
You can fight market forces for only so long.
However reputed real estate firms should verify the numbers before publishing them.
5000 homes between now and year end or 200 per working day ! forget it. Impossible.
Or 27,000 in 2012 -not a chance. I will eat my hat if Dubai gets more than 10,000 homes in 2012.
And remember the population is growing at 5% or 100,000 per annum. They will all need homes to live in.

Posted by: AlexT

@Mr. Birdie, please do share your sources with us and shine the light, because our daily life is more like seeing people leaving and businesses closing/"downsizing".
According to the "growth" you are quoting Dubai needs an additional 40.000-50.000 units a year, party time, hmmm.

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