Dubai's high-end real estate market gathers strength

Prices are rising, in some cases 'tremendously', for residential property in areas such as Palm Jumeirah, Emirates Hills and the Downtown area, says Tom Bunker, an investment sales consultant with Better Homes. He says much of the investment is being driven by the fact that people are "tired of parking their money in banks" because their deposits are earning such little interest.

"There are a lot of high-end properties that these buyers can turn around and get 5-6% yield, and that is far better than anything they are going to get from their banks now," he told AMEInfo.com.

Matthew Green, head of research and consultancy, CBRE Middle East, credits the relative scarcity of high-end real estate as a key factor driving up prices for high-end property.

"A lot of the new real estate product that is coming through is in secondary areas such Dubailand and Jumeirah Village," he noted. "If you go into well-established areas such as Emirates Hills or Palm Jumeirah, there are not many empty plots, so there is less luxury product coming through, and I think that is one reason why we have seen more growth in some of the premium components of the market."

"At the same time, we are nowhere near the kind of values they are achieving in London or New York or Singapore, so comparatively the high-end product in Dubai is a relatively good value," he added.

More volume of high-end properties being listed

Green was quick to point out that he is seeing not only a rise in prices for high-end real estate but also a spike in the number of properties for sale at the top end of the market in Dubai. "Prices have bounced back quite considerably in some locations, certainly since the bottom of the market, and I think from a homeowner's point of view it's a good time to be selling," he said.

According to a new report by real estate portal propertyfinder.ae, there has also been a big rise in the number of searches for properties valued at Dhs10m plus in 2012 compared to last year. "The fact that there has been such a leap in searches for property in the luxurious end of the market over just twelve months clearly signals that people not only now have cash to splash, but are also feeling highly confident about investing in this country," said Renan Bourdeau, managing director propertyfinder.ae.

In terms of who is buying these homes, Green said a lot of investors are coming into the market from China, in addition to the traditional source markets such as the GCC, South Asia, and Europe. "So while yes, there is still a lot of money coming from within the region, we are definitely also seeing growth from Asian investors. It's really a market that wasn't so prevalent during the last boom. I think that's an interesting trend to look at," he said.

A quick search on propertyfinder.ae reveals over 100 homes listed for sale in Dubai at prices starting at Dhs40m or higher, including a "palace" on Palm Jumeirah selling for Dhs260m. If that price is out of your budget, you can spend half as much and get a 53,000 sq. ft. villa in Emirates Hills. Or, if you don't need all that space, you can splash out Dhs72m for a "royal penthouse" apartment in Le Reve.