Real Estate Hotspot Dubai
Dubai is an emirate of superlatives on the Persian Gulf, and it attracts investors, expats and tourists almost magically. After a lull since 2014, the property market is now moving again. A market report
by Gerald Paschen
Palm Jumeirah
Always bigger, always higher, always more exclusive – Dubai has been a real hotspot for at least 20 years with its mega-projects, record-breaking buildings and exclusive residential complexes. The construction of a gigantic island in the shape of a palm tree marked a new course in the early 2000s. The Palm Jumeirah was the emirate’s message to the world: We’re really taking off in property! Since 2002, foreigners have been allowed to buy villas and flats in Dubai, and the skyline, residential complexes and tourist attractions have been growing ever since.
Dubai is home to the world’s tallest building, the Burj Khalifa (828 m), and top locations are being created with artificial canals, inland lakes and golf courses. Furthermore, the airport has grown to become one of the world’s most important aviation hubs. Dubai, which is part of the United Arab Emirates (UAE), attracts visitors with luxury, leisure activities and a more western lifestyle. It offers not only beach life on the Persian Gulf and exclusive hotels, but also elegant shopping centres, souks, nightlife, yacht harbours, polo, winter sports (ice rinks, indoor ski slopes) and promenades with restaurants and cafés.
Dubai, United Arab Emirates : Cayan Tower and Damac Residence in Dubai Marina, Dubai, United Arab Emirates.
Home to about 3.3 million people, Dubai is one of the most popular places in the world to live and visit. Besides the climate, the security and the dynamic economy attract many expats. Dubai residents do not have to pay income tax and buying property is one way to obtain a long-term residence visa. The so-called “five-year-property-investment” is particularly popular, with a required investment of AED 5 million (approx. £1 million). The latter option entitles the holder to a 5-year resident visa. Full freehold property can only be acquired by foreigners in specific zones designated by the emirate, but the most interesting development projects belong to this category. When buying a property in Dubai, one should allow 7 to 8% of the purchase price for fees, taxes and brokerage.
26 November 2019, UAE, Dubai: The incredible architecture of the tallest skyscraper in the world – the main attraction of Dubai – Burj Khalifa. Travel in Arab Emirates
Amongst Dubai’s various development projects and communities, however, the first question is where is it worth buying and how will the industry develop?
The first traces on the market were left by the financial crisis of 2008. On the second palm island called “Palm Jebel Ali”, which was built off the coast from 2002 to 2008 based on the model of Palm Jumeirah, construction projects have hardly got off the ground. Even the even more ambitious island project “The World”, with around 300 artificial islands made of sand, which together form the shape of the earth, is only developing very slowly. The World lacks a connection to the mainland and can only be reached by boat or helicopter.
Property prices in Dubai peaked in 2014, and the years between 2014 and 2019 were full of excessive construction activity and associated price falls of 20 to 30%.
According to JLL’s analysis, the total number of Dubai City residential properties has grown to 607,000 units by early 2021. The figure includes all finished flats, townhouses and villas ¬- not including workers’ accommodation and local Emirati housing. For Q1 2021, a year-on-year comparison shows that prices of properties for sale fell by 5%, with rents down 10%.
Probably as a measure to boost the property market, the emirate has been offering more opportunities to obtain a visa for about two years. And lower prices together with easier access to finance are probably behind the new emerging trend in spite of the coronavirus pandemic.
Dubai Marina View
Dubai recorded almost 31,000 property transactions this year until the end of July, a 75% increase in sales volume year-on-year. June 2021 saw the highest transaction volume since December 2013. Comparing the value of transactions from Q2 2019 to Q2. 2021, there was an increase of 102%.
The Dubai Marina neighbourhood is particularly hot, with 3,180 transactions so far in 2021 (+92 % year-on-year to July). The median price per square foot is now 1,666 dirhams (approx. £3,495/m2/-1.8 % compared to 2020). The ambience of Dubai Marina is impressive with its futuristic flair with many modern skyscrapers along the artificial canal, and there are yachts, piers, restaurants, cafés and promenades. Younger expats like to rent flats here, which also attracts investors. Mehrdad Bonakdar, founder of the KENSINGTON Group, who lived in Dubai Marina for two years in the past, has himself invested there this year: “I think Dubai Marina is one of the most interesting markets of all for investors but also for homeowners. It’s no coincidence that 10% of all transactions across Dubai are in Dubai Marina”. This is also why KENSINGTON recently opened another office in Dubai Marina.
Dubai Marina Wharf View
In second place in terms of transactions (2,229 up to July) is the Business Bay development area in the heart of the city. Here, the median price has fallen by more than 18% in one year to around £2,618/m2. The plans for Business Bay envisage more than 200 skyscrapers, with an urban lifestyle prevailing on the edge of Downtown Dubai. Living and working are to be intertwined. The Al Thanyah Fifth community comes in third place. In less than a year, the number of sales here has risen by an impressive 237 % and the median price by 21%. The complex consists of 50 land plots jutting into an artificial inland waterway. To the north are Dubai Marina and the Jumeirah Lake Towers. Prices per square metre for flats in Al Thanyah Fifth are now £2,100. There is now also strong demand for flats in neighbourhoods such as Downtown Dubai (£3,780/m2), Palm Jumeirah (£3,450/m2), Dubai Hills Estate (£2,245/m2), Jumeirah Village Circle (£1,710/m2) Sports City (£1,550/m2), Wadi Al Safa 5 (£1,540/m2).
For buyers of exclusive villas, the classic remains the closed complex Emirates Hills, the Beverly Hills of Dubai at the Montgomerie Golf Course, with prices ranging from £3.5 million to £24 million. Palm Jumeirah is in the same league in terms of villas. Only a few months ago, a signature villa here was sold for a record price of £14.4 million. A billionaire from Taiwan secured almost 1,400 m2 of land with 1,000 m2 of living space and direct beach access. A good, cheaper alternative are the closed and quiet villa complexes of the Arabian Ranches, which are located further back, already at the edge of the desert. Here it is drier and hotter than on the waterfront, and the villas, ranging from £320,000 to £6 million, are also well suited for families. For townhouses, Dubai Hills Estate can be an option at prices from £390,000 to £760,000.
Enjoyment – free happy woman enjoying sunset, relaxing at the luxury poolside.
But are these investments worthwhile? “For the second half of 2021, I expect the upward trend in the market to continue”, says Lynnette Abad, research director at the Property Finder Group. Economic boosts are then also to be expected from the world exhibition “Expo2020”, which had to be postponed for a year due to the coronavirus pandemic and will now open its doors on 1 October 2021.
Dubai wouldn’t be Dubai if major events, mega-projects and new spectacular residential complexes didn’t keep the emirate in the focus of the global public and investors.
Source:
On Location Magazine