In Dubai, there is an increased demand for luxury real estate, especially villas. And the owners of villas strive to get the maximum income by offering potential buyers exclusive properties. In particular, the exclusivity of the offer is expressed in the form of repairs, additional amenities and renovation of the property, especially in the investment properties in Downtown Dubai, Palm Jumeirah, and Akoya Oxygen. But, is the market still steady, and what locations are now in demand?
Records in the luxury real estate sector in Dubai
Premium real estate continues its ascent in the Dubai residential property market. Experts have adopted an “informal” standard, according to which the luxury property sector has a new bar – AED 300 million.
And the recent sale more than doubled the new bar. In one of the premium residential complexes, an apartment was sold for AED 632 million dirhams (USD 172 million). Prior to this, the largest deal was the sale of a villa on the artificial island of Palm Jumeirah, the cost of which amounted to AED 280 million.
Among the most expensive transactions in recent years, one should also include an apartment, which is located in one of the main symbols of the city – the Burj Khalifa skyscraper. According to experts, the cost of the transaction amounted to AED 352 million. Another residential property was sold in Marsa Dubai for AED 314 million.
Given the limited supply in the premium real estate sector, we should expect even more significant price increases. Of course, today developers are announcing new projects, trying to satisfy the requirements of demanding buyers, but in the end, there will still not be so many offers, unlike in other segments.
Lack of luxury real estate in Dubai
The demand for premium real estate is increasing. Many super-rich entrepreneurs tend to invest in the United Arab Emirates, which has long demonstrated its resilience as a prosperous state.
However, luxury property may not be enough to fully satisfy the demand of potential buyers. Already finished properties, which are in the segment of elite and super-premium housing, are starting to run out. And this situation has led to a high demand for off-plan luxury real estate market.
This tendency is particularly obvious in the context of real estate market changes: currently, numerous developers offer customers new luxury residential buildings. According to research findings, there is a substantial amount of deals in the primary market of luxury property now. But at the same time, this segment occupies a very small share of the entire real estate market.
It is noteworthy that the same situation is observed in many global housing markets, but experts from the UAE are sure that everything will be different in Dubai. At a minimum, experts are building confident forecasts, according to which the premium property market will double its share by the end of the year. It will also happen due to increased demand from investors.
Rental prices going up
Experts have been fixing the growth of rent for a long time, but its size largely depends on various factors:
- year of construction of the house,
- total area,
- availability of additional amenities.
In the most prestigious areas of The Palm and Downtown, experts recorded the highest increase in rent – in just a year it grew by 25-30%.
Also worth noting are record deals for the sale of super-premium real estate on the artificial island of Palm Jumeirah also spur rent growth. And what is most surprising is that rents have exceeded their record levels set in 2014.
In third place in terms of rent growth is the JBR area. Here, a tenant with AED 94,250 (or the equivalent of USD 25,600) can rent a one-bedroom apartment for one year. At the same time, a two-bedroom apartment is already significantly more expensive: AED 160,000 dirhams, which equals USD 43,500.
That is, if earlier the cost of renting in the JBR area was more affordable than in the prestigious Dubai Marina area, now the gap between prices is starting to narrow significantly. Experts attribute the rise in prices in the top three areas to several factors: the momentum from Expo 2020, the optimal location, the high level of security and comfort.
So, if you have been planning to purchase real estate in Dubai for future investment and renting out, you should better keep an eye on the areas mentioned above.
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