Burj Khalifa sales on rise as Downtown demand increases
Downtown Dubai is fast becoming an 'affordable' luxury homes market with global appeal.
3 minutes to read
The world’s tallest building continues to enjoy robust demand, mirroring the rest of Dubai. Indeed, with 94 apartment sales in 2022, totalling over AED 477 million, the Burj Khalifa accounted for 3% of all sales in Downtown, which amounted to AED 15.6 billion.
As has been the case for the last 18-24 months, house prices in Dubai’s most exclusive neighbourhoods have experienced the strongest growth and apartments in Downtown rank third in the city for 2022, recording an average increase of 16.7%, just behind the Palm Jumeirah (17.3%) and Dubai Hills (19%).
What’s impressive about the Burj Khalifa is that since opening 13 years ago, the tower has accounted for AED 7.9 billion of home sales, or 7% of the value of all sales in Downtown and 0.25% of all homes sold in Dubai since 2010.
Our analysis shows that apartments in Downtown have seen prices increase by 27.6% since the onset of the pandemic, making it the second-best performing submarket in the city behind the Palm Jumeirah (36.6%). High-end homes in completed communities remain highly sought after amongst both second-home buyers and buy-to-let investors.
For the latter, with apartment yields standing at c. 6%, Dubai remains one of the world’s most attractive residential investment markets, albeit the overwhelming majority of buyers in this property cycle appear to be second-home, or holiday-home hunters, rather than speculative purchasers.
Affordable luxury
Prime residential values in Dubai, which encompass the neighbourhoods of the Palm Jumeirah, Emirates Hills and Jumeirah Bay Island, have experienced record growth during 2022, albeit this has been from a low base. Furthermore, Knight Frank’s 2023 global prime residential markets forecast positions Dubai in first place at 13.5%. This comes hot on the heels of an estimated 50% rise in prime residential prices in 2022.
Despite this, prime prices stand at approximately AED 3,200 per square foot, or around US$ 850 per square foot, making Dubai one of the world’s most ‘affordable’ luxury homes markets. The most expensive apartment sold at the Burj Khalifa in 2022 transacted for around AED 4,000 per square foot (c. US$ 1,100 per square foot).
The persistent upward trajectory in home values in Dubai against a backdrop of unimpressive global macroeconomic indicators clearly shines a spotlight on the relative resilience and outperformance of the emirate’s residential market.
We have assessed a range of property market KPI’s, including Dubai’s relative affordability for domestic buyers. And despite the substantive residential price growth over the last 18 months, submarkets like Downtown Dubai remain squarely in the ‘affordable’ bracket, with apartment prices averaging around six times annual household incomes. A reading of over six usually begins to signal growing affordability issues.
There are of course a range of downside risks we are closely monitoring from contagion linked to global economic malaise, rising mortgage costs as interest rates climb and the impact of the strong dollar to which the UAE dirham retains a fixed peg. For now, the key driver of our outlook for the prime market is linked to the shortage of luxury homes in the pipeline.
For more information, please contact Faisal Durrani.