Even by the level of conspicuous consumption prevalent in Dubai’s fitful property market, apartments at the Royal Atlantis stand out. Together with the 795-room hotel that will share the building, the 231 top-end homes currently under construction on the artificial archipelago of Dubai’s Palm Jumeirah, will cost $1.4bn to build. The building will be 700m long; its 40 floors reaching 190m into the air.
From a dusty observation deck under 40-degree heat, construction manager Alan Lim surveys the site, dominated by six concrete towers jutting out of the desert. His current headache is working out how to construct the main lobby lift shaft. KPF, the architect, has decreed it should collect residents through one side, deposit them on the other, and remain, for the duration of its ascent, encircled by a waterfall. Water features are a theme.
An 80m-long communal pool will occupy a residents-only club area, 90m above ground. There will be 64 more private pools. Most feature at least one transparent side, making this Dubai’s only building “where you can swim underwater 45m up, with a view of the city skyline”, says Elie Gamburg of KPF.
As unique selling points go this sounds like a peculiar distinction, especially for homes costing between Dh6.995m and Dh42m. However, eye-catching razzmatazz is needed to lure buyers away from Dubai’s stock of high-end detached villas. These remain the favoured choice for the super-rich, says David Godchaux, chief executive of Core Savills in Dubai.
Besides those on The Palm, many lie in Emirates Hills, in the Jumeirah Lakes neighbourhood, where the plushest are individually constructed homes adjacent to the Emirates Golf Club. A second crop are in Al Barari, several miles inland, to the east of The Palm.
In Sector E, Emirates Hills, Core Savills is selling an eight-bedroom villa for Dh80m. The same agent is selling a six-bedroom villa nearby in Emirates Living for Dh22.5m. Property on the Palm Jumeirah
Increasingly, changing tastes may push sprawling super-homes out of fashion. In Jumeirah, the residential strip stretching north along the coast, recent developments have focused on a lower-rise European model. “These are aiming to escape from the domination of the motor car to put shops and restaurants within walking distance,” says Godchaux. (Residents are likely to be keener to wander the streets with a morning latte in the winter months, when temperatures average in the low-20s, than the summer months, when the temperature can reach 40 degrees.) The shift is facilitated by reform of the land titles in some areas, which extend ownership rights beyond residents of the Gulf Co-operation Council (GCC) area.
This is providing a double spur to prices, increasing demand, courtesy of the access to a larger pool of buyers, and making homes easier to sell. “As these properties become more liquid this makes them more popular with local buyers, too,” says Godchaux.
The ability to change title deeds is having a sharp impact on prices. In Jumeirah’s Umm Suqeim neighbourhood, where land titles restrict ownership to GCC residents, a five-bedroom house with a large garden is priced at about Dh20m. Less than a kilometre away, a development by Dubai Properties on freehold land is nearly complete. No prices have been announced but agents estimate that homes built on plots half the size as those in Umm Suqeim will go for twice the price.
While changing tastes may pull buyers away from the garish scale of the Royal Atlantis Residences, few of Dubai’s top-end buyers will blink at their price tags. Last year, the Middle East counted 8,380 residents with more than $30m to their name, according to data from Wealth-X in London. And, unlike in neighbouring Saudi Arabia, where the less diversified economy has been affected by the low oil price, the UAE is continuing to mint new super-rich residents.
A chunk of the $1.4tn pot that this Middle Eastern super-rich group commands has made its way into Dubai’s property market. According to a 2017 report by Cluttons, Dubai is the most popular location for Gulf-based high net worth individuals. Recent currency shifts, meanwhile, increase Dubai’s appeal. The UAE’s dirham is pegged to the US dollar, which, after years of gains, has fallen 9 per cent against a trade-weighted basket of currencies so far in 2017, meaning Dubai homes look a good deal cheaper to some buyers from abroad.
Agents point to strong sales data: more than 6,000 homes were sold in the first half of this year, a 6 per cent gain on the same period last year. UAE sanctions on Qatar should have little impact, they say: Dubai government data show that Qatari buyers accounted for less than 2 per cent of all sales in 2016.
Recent price data, however, should give buyers pause for thought. Thanks to controls on residential lending, years of a strong dollar and the tumbling oil price, Dubai home prices have dropped 13 per cent since their July 2014 peak according to government data. It’s likely that top-end price falls have been steeper. Cluttons estimates that the price for apartments over the 160 floors of the Burj Khalifa dropped by a quarter in the year to March.
Craig Plumb, JLL’s head of research in Dubai, estimates the super-prime market has come off “25 to 30 per cent” from since the middle of 2014. Average sale prices for Dubai’s finest prime homes have dropped 55 per cent since Q3 2008, according to Cluttons. On these numbers, even viewed from a glass-sided swimming pool 45m up, the outlook for Dubai’s top-end housing market looks less rosy.
Foreigners are eligible to buy homes in certain areas in Dubai.
Total transaction costs for buyers on a $2m home are around 6 per cent
The price of apartments in the Burj Khalifa, the world’s tallest building, are down 71 per cent from their 2008 peak, according to Cluttons
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