The luxury real estate gap... different tastes and insufficient response

Ismail Al Hammadi

December 27, 2022

A report issued in the past few weeks by one of the largest real estate market research companies in the Emirate of Dubai indicated an expected rise in luxury real estate prices in the emirate next year, at a rate more than six times higher than that of New York and Shanghai, and four times compared to real estate in Paris and Singapore.

The report attributed the reason for this increase to the scarcity of supply in the luxury real estate market, and the high demand in light of the insufficient response of developers to meet the needs of the sector in this field as it always was before.

While reading this report, several questions came to my mind, such as: Does Dubai suffer from a lack of areas designated for luxury real estate projects?

Does Dubai suffer from a lack of real estate developers?

Is the sector actually witnessing a scarcity in developing such projects?

In fact, Dubai does not suffer from a lack of sites in which luxury projects can be implemented. Waterfront or waterfronts that are often associated with the name “luxury real estate” are available, especially with the entry into force of the “Dubai Urban Plan 2040”, one of whose most important objectives is to increase the areas allocated to public beaches by 400%, which means raising the percentage of areas near water bodies, and perhaps the best example of this is the “Dubai Islands” project, which will add about 20 kilometers of sea beaches to Dubai.

On the other hand, Dubai does not suffer from a lack of real estate development companies, as it includes hundreds of companies of various sizes, classified among international and regional companies, and has its mark in the luxury real estate industry. We notice that many developers have been able to launch several projects in the field of luxury real estate.

However, it can be said that the supply no longer meets the volume of demand on the one hand, and it can also be said that the degree of luxury offered in the market varies from one developer to another and from one region to another on the other hand.

Apart from the main areas that were associated with the true meaning of the luxury of real estate in Dubai, foremost among which is the "Palm Jumeirah" area, you may find a very luxurious unit in the market, but the location is not suitable, and you may find the opposite, as the location is prime and attractive, but the degree of luxury of the unit does not match the advantages The site, and this is a mechanism that created an imbalance in demand despite the availability of supply.

And here comes the issue of “taste” for dealers in the luxury real estate market.

There may be other hidden reasons that we do not know related to financing, and the cost of completing huge luxury projects, for example, and here the concerned authorities in the sector must intervene to discuss the real factors of this situation, and find an appropriate solution to enable these developers to cover the demand, and give an opportunity for new developers to take their share of the luxury real estate market, Bridging the gap, and enhancing market competitiveness globally.

@ismailalhammadi

Ismail.alhammadi@alruwad.ae

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