Regional financial capital Dubai is the most affordable market for luxury property market among the world's top 10 cities as the average price declined 84 per cent from its peak level in the last five years.
Real estate analysts forecast that the prime property prices will witness further softening in 2019 amidst increased supply and overall softening in real estate market and weaker economic background.
According to Knight Frank's Wealth Report, average prime property price fell 3.4 per cent from $6,966 (Dh25,565) per square metre in 2017 to $6,729 (Dh24,695) per sqm last year, making the emirate's property cheaper than London, New York, Miami, Hong Kong, Singapore, Paris, Berlin, Shanghai and Sydney.
Taimur Khan, research manager at Knight Frank Middle East, said Dubai's current prime property prices are just 15 per cent of the average price in Hong Kong, which is the most expensive market at $32,532 per square metre.
Dubai has nevertheless seen some of the highest price premiums. In 2014 at the peak of the market, one sale achieved $42,796 per sqm, the fourth highest price achieved in any one location that year.
Khan said Dubai's relative affordability is not an indication of a lack of prime schemes. In fact, there are a number of schemes where the quality matches or in some cases, surpasses what is found in the key global cities.
"Knight Frank has seen strong demand for properties in this segment of the market, with the benefit that in Dubai, buyers are able to acquire these prime projects at values that are relatively lower, compared to other key global cities, whilst still benefitting from Dubai's business and lifestyle offer," Khan said.
Globally, Hong Kong retained its position as the world's most expensive big city market with average price of $45,760 per square metres followed by London ($32,532), New York ($32,170), Singapore ($27,482), Paris ($21,910), Sydney ($19,179), Shanghai ($17,417), Berlin ($12,577), Miami ($10,768) and Dubai ($6,729).
Commenting on the outlook of prime residential market, Khan said given general market conditions, prices are expected to soften further in 2019.
"However, there will be some fragmentation in performance between newer communities and established prime communities. As prices soften, we may begin to see greater levels of activity from owner-occupiers alongside investor activity," Khan added.
Lynnette Abad, director of research and data, Property Finder, also expects prime residential segment will most likely see slight declines in prices, consistent with the pattern seen thus far this year.
"Areas with new, upcoming supply could see more pronounced declines such as Business Bay, Downtown, Dubai Hills and Mohammed Bin Rashid City. As prices decline in popular prime residential property markets, we have seen consumer demand increase in areas such as Dubai Hills, Arabian Ranches, Palm Jumeriah and the Emirates Living areas," she added.
Jason Hayes, founder and CEO, LuxuryProperty.com Founder, said there is a stabilisation in prime residential prices as demand picks up and developers adjust supply levels.
He pointed out that initiatives such as long-term visas and Gold Card will not only help stabilise the market but will also promote modest growth.
"We have seen significant uplift in demand for mansions, villas and townhouses in recent months. Homes that are close to international private schools, world-class healthcare and excellent infrastructure will generate higher levels of demand. Projects nearing completion will also be more attractive for end users, who typically have a more immediate property than investors. In this regard, areas such as Dubai Hills Estate and District One are expected to be in very high demand this year," said Hayes.
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