Real Estate Markets in Los Angeles and London have significantly outperformed that of Dubai; however in the last 12 months, we have seen a trend reversal, given a myriad of factors. Lagged correlation analysis (0.84 and 0.97) implies that there should be a price moderation in Dubai going forward, especially in the luxury markets.
Luxury price performance has generally been superior to middle and lower markets. Mean reversion, a statistical theory that suggests prices tend to oscillate around an average point, would suggest that the widening gap between luxury and the rest of the market is due to narrow. This suggests that there is greater “value” in the mid market going forward.
Distinction Between Price Drivers and Transactional Volumes
Despite the ultra high net worth market’s superior performance, the majority of transactions have been occurring in the middle markets. This indicates a greater demand for ready properties that have average prices per square foot around 1200 AED or less. It is in this segment that we expect price “outperformance” to reassert itself as it did in the market cycle of 2014-19.
To learn more about, you can reach our new report that we prepared together with GCP Group!