The emirate’s property market has struggled to keep up with the demand, according to a real estate expert.
Dubai’s Luxury Property Market Faces Shortage Amid Soaring Demand
Dubai’s real estate market is experiencing a significant shortage of luxury apartments, causing rental prices for existing high-end properties to skyrocket. Real estate specialists point to limited availability as a key factor driving up costs in this segment.
“There’s a clear lack of ready-to-move-in luxury apartment projects right now,” noted Vladimir Minaev, a luxury property expert at Metropolitan Premium Properties. “Currently, only four or five truly high-end options are available in the market. High-net-worth individuals (HNWIs) relocating to Dubai often prefer renting initially while exploring suitable localities. However, with such limited choices, rental rates have surged.”
One striking example of this trend is a record-breaking rental agreement involving a European HNW family. The family recently paid AED 4.4 million to lease a 10,000-square-foot penthouse at The Royal Atlantis Resort and Residences on Palm Jumeirah. This rental is believed to be the largest single-unit deal in Dubai’s history. The penthouse, featuring four bedrooms, a library, a gym, and luxurious furnishings, attracted the tenants due to its world-class amenities, concierge services, and move-in readiness.
Redefining Luxury Living in Dubai
The concept of luxury in Dubai has evolved, encompassing much more than just opulence. According to Rohit Bachani, co-founder of Merlin Real Estate, luxury today includes elements such as lifestyle, connectivity, premium amenities, and a distinct identity. “The influx of HNWIs into Dubai has significantly diversified the luxury property market,” he explained.
However, the increasing demand has created challenges for the market to keep pace. “Over the past few years, the need for luxury apartments has surged, but supply has struggled to catch up,” observed Jeff Raju Kuruvilla, CEO of Manifest Real Estate. “Buyers are seeking properties in prime locations that offer architectural uniqueness and top-tier amenities. While developers have launched exceptional projects in 2024, the demand continues to outstrip supply.”
Limited Options and High Returns
Off-plan luxury properties are in particularly high demand, with many selling out within hours of being launched. These properties are also being resold in the secondary market at premium prices. Despite the scarcity, the luxury segment remains an attractive investment.
“Luxury properties don’t often appear in the rental market,” Minaev added. “Owners typically buy and sell rather than rent them out. While finding a villa may be relatively easier, penthouses and high-end apartments are much harder to come by.”
This limited supply is contributing to strong rental yields, which range between 5% and 7%, making luxury properties a magnet for investors. Areas such as Palm Jumeirah, Downtown Dubai, and Business Bay remain top choices for buyers and renters alike.
Additionally, branded residences have emerged as a dominant trend in the luxury market. These exclusive developments offer a unique blend of prestige, amenities, and prime locations, making them some of the most sought-after properties in Dubai.
