U.S. cities dominate the rankings, with Dubai being the only non-U.S. top five spot and fourth in leading residential NPV growth in the first half of 2022, according to global real estate advisor Savills says.
Dubai is set to perform the strongest for the remainder of 2022, according to Savills.
In its bi-annual study of prime residential capital values and rents across 30 major global cities, Savills says Dubai has recorded strong performance on both prime residential capital growth and rental growth assessments for the period ended June, reflected in the Savills Prime Residential Index: World Cities.
In Dubai, prime prices grew by 4.7% during the first half of the year and the city is forecast to witness strong capital growth continue for the remainder of 2022.
Meanwhile, across the 30 cities covered by the Savills Index, capital values grew by an average of 2.4%.
Aided by the inflow of high-net-worth individuals and the success of its Golden Visa scheme, the UAE—and therefore Dubai—is predicted to continue to attract high-net-worth individuals at above pre-pandemic levels.
The UAE is predicted to receive 4,000 millionaires relocating to the country in 2022, four times the pre-pandemic norm of 1,000 per annum, according to Henley & Partners. The emirate continues to channel investment into the city’s infrastructure, improving its leisure and tourism offering with the aim of retaining and attracting talent and businesses.
Along with the other top performers Miami, Lisbon and Cape Town, Dubai benefited from the renewed appreciation for a warmer climate, higher quality of life, and an increased desire for more space.
Miami holds the top spot for prime capital value growth in the first half of 2022, recording a half-year rise of 12.5%. Lower taxes and a high quality of life encouraged migration from other US locations, fuelling the city’s success. North American cities have performed the strongest in 2022 so far, followed by cities in Europe.
Most global cities are experiencing the impact of geopolitical uncertainty, increasing inflation, and rising interest rates, albeit this is yet to materially impact pricing in the prime markets, the report says.
Helen Tatham, Head of Prime Residential Dubai says: “Our study forecasts that the capital value growth across the 30 global cities we monitor will average at 2.2% in H2 2022, slightly lower than the 2.4% recorded in the first half of the year. Dubai is set to perform the strongest for the remainder of 2022 and factors that work in its favor include the continuously positive changes to policies, the most recent being additional benefits for long-term visa holders, with the opportunity for residents to have a superior quality of life at their fingertips.
“In addition to a surge in high net-worth expatriates choosing Dubai as a new long- or part-time residential location, there is a growing trend of existing residents taking a long-term view on making Dubai their primary home.”
Prime residential rental growth outpaced capital value growth in the first half of 2022, increasing by an average of 3.1% across the Savills World Cities Prime Residential Index, set against a 2.4% increase in capital values.
Stock shortages and pent-up demand following migration to cities with the re-opening of international borders at the end of 2021 continued to fuel growth. A revival of corporate travel, purchasers ‘trying before they buy’, and a prioritization of the home thanks to more remote working are all factors driving the growth in the prime rental markets of the world’s leading cities.
In Dubai rents have grown apace, benefitting from the wider lifestyle trends seen in other markets, recording 5.3%. The emirate also emerged as the third best destination in the world for executive nomads in an earlier Savills study, helped by its expansive visa program, favorable climate, great connectivity, and established prime residential market.
Increasing 8.5% for H1 2022, New York reached its highest rents on record, driven by tight inventory and demand for larger spaces, for which renters are willing to pay a premium. It was followed by Singapore, London, Lisbon, Miami, and Los Angeles, all growing at 5.5% or above.
In terms of yields, Dubai, New York, and Los Angeles were the highest yielding cities, above 4.5%, though these have moved in since June 2021. To compare, in the six months to June 2022, the average gross prime yield across the 30 cities within the Index remained at 3%.
Swapnil Pillai, Associate Director of Middle East Research, said: Renting is a short-term but still practical solution for those who want to experience a place or accommodation before committing to a long-term and often costly contract. Outdoor spaces will continue to be an important theme in the future.
