Despite the popular assumption that most of Dubai’s real estate stock and transaction volumes are concentrated in the prime/luxury end of the market, this sector represents just 3% of the emirate’s residential transactions in 2017, according to Core Savills’ new report, ‘Global Comparisons – Around the world in prices and yields’.

This may come as a surprise given Dubai’s image as an expensive metropolis with an overpowering luxury property market, however, as the market continues to be inundated with high levels of new stock in the lower end, the prime sector may provide better prospects for investors in the coming few years, says Core Savills.

At a glance:

• Due to low buying, selling and holding costs and nominal tax regime, prime and ultra-prime property prices in Dubai are amongst the lowest of any comparable global hub.
• Given Dubai’s position as a tourist destination and global city within five hours flying time to one third of the world’s population, its strong demand for real estate is expected to be sustained in the long run.
• Despite its high-end reputation, Dubai’s luxury property sector represented just 3% of the emirate’s residential transactions in 2017

The report says that prime and ultra-prime property prices in Dubai are now amongst the lowest of any comparable global hub. Notably, prime properties in Dubai are approximately 40% less expensive than Singapore and 50% less than Moscow and Paris. Dubai’s ultra-prime market is also relatively inexpensive compared to Shanghai and Tokyo, where average prices are almost 60–70% higher than the emirate.

The long-term investment potential in Dubai’s prime segment is reinforced by a nominal tax regime and notably low real estate investment costs. These costs – associated with buying, holding and selling property – in cities such as Hong Kong are approximately 32%, while costs in Singapore and Tokyo are nearly 20%, representing an additional charge equivalent to almost a quarter of the value just to buy, sell or hold property. With notably low buying and selling fees, and almost no holding charges, investment costs in Dubai amount to just 8%. These costs have a significant impact on any comparison of prospective investment yields in different cities across the world says core Savills.

“Given Dubai’s position as a global tourist destination and regional economic hub within five hours flying time to around one third of the world’s population, strong underlying demand for prime and ultra-prime properties is expected to be sustained in the long run. As the market grows and continues maturing, adding depth and liquidity on the back of population growth, the demographic pressure is also likely to continue moulding the cityscape in a way that will make core area prices appreciate and stabilise” says the new report.

To see the full report, click here.

See also:

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