Market Overview
Luxury apartments are in short supply in Dubai’s real estate market, according to real estate specialists. As a result, the rental prices of these existing units have increased “tremendously.”
“We don’t have many luxury apartment projects ready at the moment,” said Vladimir Minaev, luxury property specialist at Metropolitan Premium Properties. “We only have four or five truly luxurious options on the market. When high-net-worth individuals (HNWIs) move to the emirate, many choose to rent while looking around and finding a locality that works best for them. Since these properties are hard to come by, the rates are also quite high.“
Record-Breaking Rental Deal
A prime example of this growing trend is a recent rental deal involving a European HNW family, who paid Dh4.4 million for a 10,000 sq ft penthouse at The Royal Atlantis Resort and Residences on Palm Jumeirah. This is believed to be the most significant single-unit rental agreement in Dubai’s history. The penthouse, which includes four bedrooms, a library, and an exercise room and comes fully furnished, appealed to the tenants for its high-end amenities, hotel concierge services, and turnkey readiness.
Evolving Luxury Market
Rohit Bachani, co-founder of Merlin Real Estate, highlighted the evolving definition of luxury, stating: “The concept of ‘luxury’ has also expanded beyond its traditional meanings,” he said. “Today, it’s not just about opulence. It’s about the lifestyle, the connections, the amenities, and a strong sense of identity. The influx of HNWI into the country is further diversifying the market.“
Supply and Demand Challenges
The property market has struggled to keep up with the demand, observed Jeff Raju Kuruvilla, CEO of Manifest Real Estate. “With the influx of HNWI in Dubai in recent years, the need for luxury segment apartments has grown,” he said. “Demand has outpaced the supply. Buyers require properties in specific locations with architectural uniqueness and high-end amenities. Although top developers launched some unique projects in 2024, it could not meet the demand.“
He added that off-plan properties in the luxury segment “are selling within a few hours” of being launched and that these properties are “selling in the secondary market at premium” costs.
Investment Potential
Vladimir said that one reason for the demand was that luxury properties were rarely put for rent. “People normally don’t rent luxury properties,” she said. “They normally buy and then sell it. So there are not many options available. If you were looking for villas, they would be easier to find, but in the penthouses category, the options are minimal.“
Jeff added that the returns on such properties were also very high. “The luxury segment is still enjoying a 5 to 7% rental yield, attracting new investors to invest in established areas like Palm Jumeirah, Downtown, and Business Bay,” he said. “In recent years, a new trend has dominated Dubai’s property luxury market—branded residences. These have also become one of Dubai’s most sought-after segments in luxury real estate.“
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