Dubai, 14th November 2023 — Global property consultancy, Knight Frank says Dubai has emerged as a true ‘live, work, play’ city that is now on par with major global hub cities, in its new report: Rise of the Super Wealth Hub Series: Dubai edition.
Knight Frank’s comprehensive method of assessing the habitability and attractiveness of Dubai investigates six core areas, including Urban Prosperity, Governance & Talent, Legal Framework, Enterprise Excellence, Lifestyle, and Opulence. These indicators have been used to build a proprietary model that evaluates cities based on the ‘live, work, and play’ paradigm, with each individual component rated on scale of 0 to 1.
Dubai has achieved significant scores in two key domains: Work and Live. In the realm of Work, Dubai stands out for its business-friendly environment, ease of doing business (0.92), ease of capital flow (0.85), and financial market competitiveness (0.82), cementing the city’s globally renowned business and investor friendly status.
On the Live component, Dubai offers a high quality of life, as evidenced by high scored for average travel times (0.75) and purchasing power parity (0.80), both of which contribute to a comfortable and enviable cosmopolitan lifestyle for the city’s residents and visitors.
Faisal Durrani, Partner – Head of Research, MENA, commented: “Dubai’s live-work-play lifestyle has attracted global attention in the wake of the pandemic. And this attention has been matched by unrelenting demand for real estate in the emirate, which has underpinned the emergence of the deepest luxury homes market in the world, as well as a Grade A office market that has virtually run out of space and a hospitality market that boasts the highest occupancy levels in the world.
“This accolade has resulted in Dubai emerging not only as the world’s most popular tourist destination in the world but has also earned Dubai International Airport the title of being the busiest international hub for the last 10 years”.
Dubai’s promising economic outlook recently received a significant boost with the unveiling of Dubai’s Economic Agenda, known as D33. This visionary initiative outlines a transformative US$ 8.7 trillion roadmap, aiming to double the emirate’s foreign trade and position Dubai as the world’s fourth most prominent financial centre by 2033, coinciding with the 200th anniversary of Dubai’s founding.
Durrani continued: “In any emerging market, sentiment plays a hugely underestimated role in driving not only economic growth, but real estate activity as well. And the same is true for Dubai. The ambitious vision unveiled by the government for both 2033 and 2040 set out plans to more than double the city’s population to 7.8 million by 2040. To accommodate this growth, we estimate that the city will need an extra 70,000 homes a year between now and 2040. Our forecasts show that the city will see just 13,000 homes a year completed over the next six years, highlighting not only the scale of the opportunity, but also the demand-supply imbalance that will likely continue driving up home values.
“Even if only 50% of the projected population growth is realised, the city still needs 35,000 homes a year, which is itself higher than the historic 30,000 unit per year completion rate.
Knight Frank’s assessment of Dubai
WORK: Thriving Office Market
Dubai’s office market remains anomalous on the world stage, with rising rents, growing demand, and decreasing vacancy rates. The city’s magnetism for international businesses is evident, particularly in the banking, fintech,
media, and telecommunications sectors, where new companies are establishing regional offices, or continuing to expand existing footprints. The lack of long and expensive commutes as is often the norm is major global hub cities, combined with a high proportion of expat workers means the office, for many, is at the heart of social circles and so the ‘great office reoccupation’ post-Pandemic has been hugely successful.
LIVE: Rising Standard of Living
Dubai’s prosperity over the past five decades has transformed it into a global commerce hub, leading to a consistently rising standard of living and exceptional public safety. However, the increased cost of living has positioned Dubai among the world’s most expensive cities. Despite this, the demand for luxury homes remains strong, with Dubai emerging as a top destination for second-home buyers. Indeed, 66% of global HNWI are keen to secure a second home in Dubai (see: Knight Frank’s Destination Dubai)
PLAY: International Appeal and Transformative Growth
Dubai’s appeal to international buyers and investors has transformed since the emirate opened its residential property market to global buyers in 2002. The market’s maturity, world-class amenities, and strategic location of being within 8-hours’ flying time to two-thirds of the world’s population has helped transform the emirate from a fishing village to global metropolis. The decision to establish a tax-free zone around Dubai Creek at the turn of the 20th century was key in unlocking the city’s potential. Emirates Airlines and Dubai International Airport have since played pivotal roles in establishing Dubai as a premiere tourist destination.
GREEN: Commitment to Sustainability
Dubai is committed to addressing its green building deficit with projects like the ICD Brookfield Place, Sustainable City and Expo City serving as benchmarks for the wider Middle East to emulate. Future development is also linked to sustainability, with initiatives such as the 44 square kilometre Mohammed Bin Rashid Solar power plant – the world’s largest single-site solar array – is responsible for 15% of the emirate’s power needs. 100% of power generation in the city is expected to come from renewable by 2050.
Furthermore, the UAE government is implementing green and sustainable building standards rigorously, with more than 79 specifications to regulate UAE sustainability approach in all new builds, the mandate covers; building materials & fabric, waste management, ventilation and air quality, carbon emissions, Environmental impact analysis, day light usage, acoustic and thermal comforts, conversion and efficiency of energy sources, Renewable Energy usage. These codes are applied in all new projects through the different governmental municipalities and subsidiaries. The main objective is to reduce around 30 per cent of carbon emissions by 2030.
Separately, Dubai has a goal of having 35% of buildings constructed using 3D printing by 2030.
RESIDENTIAL MARKET PERFORMANCE
Dubai’s residential property market has experienced sustained demand and price growth for nearly 4-years in this, the city’s third freehold residential market cycle. Indeed, prices rose by an average of 5% during Q3 2023, marking the 11th consecutive quarter of price growth. Apartment and villa prices are now up by 19% and 18%, respectively, on this time last year, but the market, crucially, remains some 8.1% down on its 2014 peak.
Apartment prices have risen by 5.1% during Q3, reaching AED 1,300 per square foot, while villa prices increased by 4.5% over the same period and now stand at an average of AED 1,580 per square foot.
Durrani concluded: “Looking forward to 2024, we anticipate mainstream property values to grow by 3.5%, while the prime residential market is expected to see even stronger price growth at 5%. Dubai’s prime residential market is poised to remain one of the fastest growing in the world during 2024, albeit with prime prices standing at around $1,020 per square foot, the city is one of the most affordable luxury homes markets in the world. This is being driven by renewed and extraordinary demand from key source markets such as China, the UK and India”.