Dubai, among Top Three global realty destinations for the super-rich

Dubai, alongside Madrid (Spain) and Cape Town (South Africa), has been rated as one of the world's Top Three property destinations with the maximum potential to appeal to the super-rich looking to invest in real estate, while London remains the No.1 choice among buyers looking to buy in a new report prepared by Sotheby's International Realty in tandem with the research firm Wealth X.

Dubai, one of the top cities in the world today and home to an estimated 495 ultra-high-net-worth individuals and 34 billionaires - more than any other city in the Middle East - was chosen based on the many lifestyle opportunities it had to offer.

According to Wealth X, there are more than 211,275 ultra-high-net-worth-individuals across the globe, with a collective real estate holding of an estimated US$3-trillion.

Dubai also topped the list for the average price per square foot of properties with a value in excess of US$1mn, coming in at US$834, far ahead of Madrid (US$526) and Cape Town (US$350), but a lot cheaper than London (US$3,103) where about a third of properties priced higher than US$1mn, sell for more than US$10mn vis-à-vis Dubai, where the average price or property in this category was approx US$5.5mn.

Meanwhile the broad outlook for Dubai's realty market remains positive with the demand for both residential and commercial space likely to grow in the near term driven by a growth in population, according to the latest data issued by leading property portal Bayut.com.

The report further adds that the ongoing slowdown in the city's property market caused by factors ranging from the strengthening of the dollar to a fall in global oil prices, would allow property prices in the city to return to more realistic levels after a spurt in demand over the past two years triggered a steep price increase.

As per the report, the regulations imposed by the government on the real estate market have now started to bear fruit with the effects of mortgage cap and hike in registration fees now becoming more pronounced and pushing the market towards stabilization also in the process helping it to lose some of the excess weight it had gained earlier.

Drawing a comparison between prime real estate in cities like New York and Singapore which lost 4.4 percent and 12.6 percent of value in March 2015, the report said the Dubai property market dropped just 1.1 percent during the month.

Inspite of the slowdown, the report further noted that the returns from large to small apartments in Dubai ranged from between 5-7.5 percent, which was still higher when compared to the 2-3.5 percent returns clocked by other global cities like Singapore, London and Hong Kong.

While the market is expected to witness a renewed interest from buyers looking to invest in apartments, developers launching projects aimed at mid-income buyers are also likely to see heightened demand, the reports adds.

However the market for luxury villas in the city is likely to come under severe pressure with an estimated 4,000 new villas expected to add to the existing supply sometime later this year.

The impact of this new stock of villas coming into the market is most likely to be felt by the secondary villa market, while the owners of villas priced upwards of AED5mn are not only expected to bear the brunt of the added supply but also by mortgage figures with the loan-to-value ratio for villas priced AED5mn and above changed from 75:25 to 65:35.

However Dubai villas available in the AED3-3.5mn price band are not likely to be affected the report adds.