Ultra-Luxury Real Estate Market Growth in Dubai, New York, and London (2019-2024)
Dubai experienced the strongest ultra-luxury real estate growth, driven by affordability and lifestyle. London and New York remained resilient amid challenges like rising interest rates.
The ultra-luxury real estate markets in Dubai, New York, and London have undergone significant changes in the past five years. Each city has shown unique growth trends, driven by factors ranging from economic policy to changing global wealth patterns. This analysis provides insight into which of these major markets experienced the most growth, the reasons behind these changes, future growth opportunities, and the associated risks.
Dubai: The Fastest-Growing Ultra-Luxury Real Estate Market
Dubai has positioned itself as a leading hub for ultra-luxury real estate, with tremendous growth in the $10 million+ property segment. Between 2019 and 2024, Dubai saw a dramatic increase in transactions, rising from 23 to 436 annual sales, making it the fastest-growing market in this segment globally. Several factors have contributed to this growth:
Affordability and Value: Compared to other major cities like London and New York, Dubai's luxury properties are relatively more affordable. This makes Dubai an attractive destination for high-net-worth individuals (HNWIs) seeking high-quality homes with greater value per square meter (Knight Frank, Savills, JLL)
Favorable Lifestyle and Business Environment: Dubai's reputation as a safe, business-friendly city with modern amenities and year-round sunshine continues to attract wealthy buyers. High demand for waterfront properties, particularly in iconic locations like Palm Jumeirah, underscores Dubai's appeal for lifestyle buyers (Knight Frank, Savills, CBRE)
Post-Pandemic Recovery: Dubai's rapid recovery from the COVID-19 pandemic, thanks to proactive measures and early reopening, has also helped boost confidence among investors. The "revenge spending" phenomenon has been a major driver of demand for super-prime homes in Dubai, as the world's wealthiest individuals look for lifestyle investments (Knight Frank, Colliers)
London and New York: Resilient Markets Amid Challenges
London remains one of the largest markets for ultra-luxury real estate globally, despite facing challenges related to political and economic uncertainties. The expected changes to non-domiciled taxation policies have had a dampening effect on sales growth. However, London still ranks as the second-largest super-prime market, outpacing New York by 15% in terms of total sales in the 12 months to March 2024 (Knight Frank, Cushman & Wakefield)
New York, on the other hand, has faced some obstacles, including higher mortgage rates and a dip in luxury sales volume in 2023. Sales in the $10 million+ segment were down by about 37% year-on-year, as buyers adjusted to increased borrowing costs. Despite this, New York continues to be a major global hub, with strong investor interest driven by its position as a financial capital (Knight Frank, Savills, Forbes Real Estate)
Future Growth Opportunities and Risks in Ultra-Luxury Real Estate
Among the three cities, Dubai appears to hold the most potential for future growth in the ultra-luxury market. The combination of affordable luxury, favorable tax policies, and the city's position as a leading global business hub make Dubai an attractive destination for investors. The surge in ultra-high-net-worth individuals (UHNWIs) globally, with a reported 19% increase over the last five years, is likely to further support Dubai's luxury property market (Knight Frank, Savills, CBRE)
However, there are inherent risks to consider when investing in ultra-luxury real estate across these locations:
Economic Uncertainty: Rising interest rates have impacted sales volumes in New York and London. Investors face uncertainties regarding borrowing costs, which can influence their purchasing power and affect market dynamics (Savills, Cushman & Wakefield)
Political and Regulatory Risks: In London, ongoing political uncertainty and potential changes in non-domiciled tax regulations may deter some foreign investors. These factors have already affected sales volumes, making the market less predictable (Knight Frank, Colliers)
Affordability and Social Issues: Housing affordability issues have become a growing concern in major cities, leading to potential regulatory actions aimed at curbing speculative investments in the luxury market. This is particularly relevant in New York, where dissatisfaction with housing affordability is at an all-time high (Savills, Forbes Real Estate)
Conclusion
Dubai has seen the most significant growth in the ultra-luxury real estate market over the past five years, driven by its affordability, lifestyle appeal, and favorable business environment. While London and New York continue to be resilient markets, they face challenges that could limit growth prospects. Investors should consider the economic and regulatory risks associated with these cities, especially in light of rising borrowing costs and political uncertainties.