Super rich drive Middle East luxury real estate boom

Khaleej Times

23-04-2025

The Middle East is experiencing an unprecedented surge in high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs), with the UAE emerging as a global magnet for wealthy investors.
According to the latest Private Capital Report by Knight Frank, a leading global property consultancy, the number of dollar millionaires in the UAE has surged by nearly 98 per cent over the last decade, fuelling a dramatic increase in high-value property transactions and transforming Dubai into a global luxury real estate hub.
The report highlights that as of December 2024, the UAE hosts approximately 130,500 dollar millionaires, making it the 14th-largest wealth market worldwide. This rapid growth is underpinned by strategic economic reforms, ambitious national visions, and a stable political environment that continue to attract international investors. In particular, the influx of millionaires has been significant over the past few years, with 7,200 new dollar millionaires arriving in 2024 alone — a jump from 4,700 in 2023 and 5,200 in 2022. Data from Henley & Partners indicates that these new arrivals are drawn by the country's attractive fiscal policies, luxurious lifestyle, and visionary governance.
The majority of inbound millionaires originate from India (31 per cent), followed by the Middle East (20 per cent), Russia & the Commonwealth of Independent States (CIS) (14 per cent), and the UK & Europe (12 per cent). Such diverse origins underscore the UAE's position as a global nexus for wealth migration, especially at a time when political and economic uncertainties are prompting high-net-worth individuals to seek safer, more stable environments for their assets.
The thriving influx of wealth is reflected vividly in Dubai's residential real estate market. The city has surpassed traditional luxury markets like London and New York in the ultra-luxury segment, particularly in sales of homes valued at $10 million or more. Last year, Dubai recorded 435 such transactions — just edging out the 434 transactions of 2023 — with the fourth quarter of 2024 alone witnessing 153 sales, setting a new record for quarterly high-value deals.
In the first quarter of 2025, the market continued its upward trajectory with 111 homes sold for over $ 10 million, marking the highest Q1 on record. This is a 5.7 per cent increase compared to the same period last year, indicating that Dubai's luxury property sector is on track for yet another record-breaking year.
Faisal Durrani, partner and head of Research for Mena at Knight Frank, explained, 'Dubai's luxury residential market continues to defy gravity. International demand remains exceptionally strong, with the city establishing itself as the world's premier destination for ultra-luxury real estate.'
The Palm Jumeirah remains Dubai's most coveted ultra-prime address, accounting for 34 transactions worth a combined $562.8 million during Q1 2025. Emirates Hills follows with 15 sales totalling $356.7 million. The community also saw the most expensive deal of the quarter—a six-bedroom villa sold for $106.3 million in January, which was initially purchased for just $6.6 million in 2015. This represents an extraordinary appreciation of 1,635 per cent, averaging nearly 34.6 per cent annual growth.
The top end of Dubai's luxury market continues to attract global UHNWIs. In Q1 2025, twelve transactions exceeded $25 million, only slightly below the 15 deals in the previous quarter. Such figures underscore an ongoing appetite for one-of-a-kind trophy homes, which is keeping demand high despite limited supply.
Demand outstrips supply, especially in the ultra-luxury segment. The number of new villas delivered at the highest price levels has shrunk considerably. In 2023, virtually no new villas were introduced in the Dh5,000-plus psf category, and in 2024, only 16 villas entered the market at this level. Meanwhile, supply in the Dh2,000-3,000 psf range — covering many prime properties — declined by 57 per cent year-on-year, with the Dh3,000-5,000 psf segment decreasing by 39 per cent.
Nicholas Spencer, partner at Knight Frank, noted, 'Dubai has cemented its position as a top destination for HNWIs seeking both personal residences and investment opportunities. Our research indicates that global HNWIs have earmarked approximately $4.4 billion for investment in Dubai's residential market, reflecting a 76 per cent increase from 2023.'
The overall residential market in Dubai remains robust, with transaction volumes reaching nearly 170,000 deals in 2024, valued at around $115 billion. Notably, homes priced at US$ 10 million or more accounted for roughly 6 per cent of total sales value, emphasising the high-end segment's significance.
Wealth levels strongly influence buying patterns. For instance, 78 per cent of those with personal wealth exceeding $15 million are interested in Dubai properties, with the average purchase budget among GCC-based HNWIs at $3.1 million. Among ultra-rich investors, 25 per cent are willing to spend between $60 million and $80 million on a Dubai residence, while 16 per cent are contemplating purchases exceeding $80 million.
In addition to market dynamics, Knight Frank highlights the rising importance of family offices in the region. These entities, which manage wealth across generations, are increasingly attracted to Dubai and Abu Dhabi due to advanced legal frameworks and favourable regulations. Buthainah Albaity, Partner and Head of Private Capital and Family Enterprises for Mena, explained that competition among regional countries to attract these offices is fierce, recognizing their potential to drive long-term investment, innovation, and economic stability.
With estimates suggesting that around $84 trillion will be transferred between generations globally over the next two decades, the Middle East is already witnessing a significant wealth transfer. In Saudi Arabia, many family businesses are transitioning from second to third-generation leadership, with Dubai and Abu Dhabi emerging as preferred locations for establishing trusts and managing cross-border assets.
Beyond the UAE, other Middle Eastern markets are showing signs of growth. In Saudi Arabia, interest in residential property remains high, especially in the Holy Cities of Makkah and Madinah. Knight Frank's research indicates that approximately US$ 2 billion of potential investment is being considered by HNWIs from nine Muslim-majority nations, primarily for use as primary residences in these sacred cities.
Qatar's real estate market is also gaining attention, with $537.5 million of private capital actively seeking residential opportunities, out of an estimated $3.2 billion worth of sales in 2024. Meanwhile, Egypt's real estate sector remains highly attractive to GCC investors, with a preference for residential properties, branded residences, and retail sectors.