< Previous50 Vol. 25/03, March 2024 SPECIAL REPOR T Dubai real estate market faces unprecedented boom, poised for accelerated growth The emirate’s sales and rental market is continuing to see an upward trajectory, creating a favourable market for sellers and landlords. According to the latest Bayut report, the upward trend is set to continue due to a high influx of residents and investors BY NICOLE ABIGAEL The Dubai rental and sales market is on track for accelerated growth amid a period of unprecedented boom as investor s and residents continue to fl ock to the city, according to Bayut’s 2023 Dubai Property Market Report, the upward trajectory is set to continue, creating a favourable market for sellers and landlords. In 2023 a total of 132,628 property sale transactions took place, collecting a total value of AED409.8bn ($111.57bn). KEY DUBAI PROPERTY TRENDS Property segment preferences In 2023, the affordable proper ty segment saw increased interest in areas like International City, Dubai Resi- dence Complex, DAMAC Hills 2, and Dubailand. Mid-range budget buyers favoured Jumeirah Village Circle, Dubai Silicon Oasis, Al Furjan and The Springs. Luxury property areas in Dubai reported consistent appreciation in transactional prices ranging from 3 percent to 17 percent in 2023arabianbusiness.com 51 SPECIAL REPOR T Luxury property investors demon- strated a preference for Dubai Marina, Business Bay, Arabian Ranches and Dubai Hills Estate. Transactional sales prices for budget-friendly apartments witnessed increments ranging from 5 percent to 50 percent, while aff ordable villas expe- rienced a general decrease of 10 percent to 26 percent. The mid-tier property segment displayed a three percent increase in average sales transaction prices for apar tments, with outliers such as Jumeirah Lake Towers seeing a 0.77 percent decrease. Luxury property areas reported consistent appreciation in transactional prices ranging from 3 percent to 17 percent. The total transactional value of AED 409.8bn, encompassed both resi- dential and commercial purchases. The heightened demand for properties in Dubai is expected to increase, Khan believes In the mid-tier segments, Dubai Silicon Oasis, Dubai Sports City and Motor City stood out with rental yields of up to 9 percent. Luxur y apartment segments in areas like Al Sufouh, Green Community, and Jumeirah Golf Estates presented returns of up to 10 percent, surpass- ing global benchmarks. ROI trends for villa communities also showed positive growth, with Al Rashidiya, International City and Jebel Ali off ering ROI percentages exceeding 8 percent. Mid-tier villas in JVC, Town Square and Reem recorded projected ROIs of between 6 percent and 8 percent, while luxury villa communities like Al Barari and Pearl Jumeirah presented advanta- geous ROIs exceeding 8 percent In the rental market, advertised prices surged by 4 percent to 17 percent for affordable apartment rentals in sought-after areas. Mid-tier segment apartments witnessed double-digit increases of up to 23 percent, and luxury apartment rentals saw prices increase by 4 percent to 21 percent. International City emerged as the most popular area to purchase apart- ments in Dubai with a price per square foot witnessing a surge of 15.5 percent at an average cost of AED583. Accord- ing to the sales history, the average transaction price in the neighbourhood was recorded at AED383,000. Studios listed for sale within the area were priced at AED286,000 and one-bedroom apartments were listed at an average of AED403,000. Villa rental trends Reasonably-priced villas experienced price upticks ranging between 10 percent and 33 percent, while rental houses in Dubai South became more aff ordable by up to 6 percent. Mid-tier villas reported increases of one percent to 21 percent, and luxury villa rentals in Dubai surged by 38 percent. Top rental areas in 2023 Popular choices for renters in the aff orda- ble segment included Al Nahda and Deira for apartments and Mirdif and Dubai top areas for investors The remarkable upswing in Dubai’s property sale prices, fuelled by pivotal factors, has propelled the real estate market to new heights. Upon analysis of historical data for property sales in Dubai, Bayut reveals a notable 37.3 percent upward trend, underscoring the market’s robustness and appeal. This surge in demand is attributed to several factors, including the city’s resil- ient economic recovery, enticing invest- ment prospects, and a substantial infl ux of both local and international investors. Areas of interest from potential investors • Jumeirah Village Circle (JVC) • Business Bay • Dubai Marina • Downtown Dubai • Dubai Silicon Oasis Return on investment (ROI) trends Analysing the return on investment (ROI) based on projected rental yields for apartments, areas like DIP, Liwan and Discovery Gardens emerged as the top options, off ering yields of up to 11 percent.52 Vol. 25/03, March 2024 SPECIAL REPOR T DAMAC Hills 2 for villas. In the mid-tier segment, Jumeirah Village Circle (JVC) and Bur Dubai were favoured for apart- ments, while JVC and Arabian Ranches 3 were preferred for villas. Studio apartment prices in Jumeirah Village Circle (JVC) averaged AED 510,000 in 2023, while one-bedroom and two-bedroom units cost AED778,000 and AED1.19m, respectively. For mid-range budgets, Dubai Sili- con Oasis (DSO) also emerged as a popular choice, DSO apartments saw a signifi cant increase in price per square foot (4.91 percent), reaching an aver- age of AED676 in 2023. Historical data shows an average sale pr ice of AED493,300 for DSO apartments, with a 0.82 percent rise in 2023. On average, studio fl ats in DSO cost AED352,000, while one-bedroom and two-bedroom units sold for around AED488,000 and AED829,000, respectively. Furthermore, Bayut’s Dubai real estate report indicates growing interest from mid-tier investors in Jumeirah Lake Towers (JLT). The price per square foot for JLT apartments rose by 11.8 percent, averaging AED1,183 in 2023. In the luxur y categor y, Dubai Marina and Business Bay were popular for apartment rentals, while Dubai Hills Estate and Al Barsha were coveted for high-end villa rentals. According to data from the Bayut 2023 Dubai Property Market Report, these family friendly neighbourhoods surged in popularity: • Al Nahda • Deira • DAMAC Hills 2 • Mirdif For tenants seeking affordable accommodation, f amily-fr iendly neighbourhoods such as Al Nahda, Deira, Mirdif, and DAMAC Hills 2 have shown a notable preference. The rental prices in Al Nahda, for instance, increased across the board, with studios seeing a significant 16.7 percent rise, and one-bedroom and two-bedroom confi gurations reporting upticks of 9.73 percent and 8.39 percent, respectively. Upscale budget areas: • Dubai Marina – With a ROIs of 7.15percent in 2023, Dubai Marina took the lead for the highest return on investment for upscale apartments. • Business Bay – Offering projected rental yields of 6.60 percent, luxury apartments in Business Bay emerged arabianbusiness.com 53 SPECIAL REPOR T as a strong contender for investors seeking good returns. • Dubai Hills Estate – Average returns on investment was recorded at 5.54 percent in 2023 • Al Barsha also emerged as an area of choice for regional and international renters Transactional rental price analysis Most increases in affordable neigh- bourhoods for both villas and apart- ments ranged within the fi ve percent to 11 percent range. The mid-tier segment reported increases of up to 17 percent, and luxur y apartment rentals saw transaction prices rise by 11 percent to 15 percent. Luxury villa rentals experienced a notable increase of 26.4 percent in Dubai Hills Estate. Last year has unde- niably been a phenomenal year for the Dubai real estate market, with transac- tions nearing an AED100bn in the third quarter alone. The supply-de- mand dynamics, characterised by limited new supply in sought-after loca- tions, are anticipated to drive prices upward in 2024 due to increased competition among buyers. Haider Ali Khan, CEO of Bayut and Head of Dubizzle Group MENA, said: “The Dubai property sector has maintained its commendable growth trajectory, concluding 2023 on a high note. Our data reveals sustained progress in property prices, driven by heightened demand from investors and residents wanting to own property in this promising market.” “There are notable upticks in sales prices across various segments, refl ecting the appeal of Dubai’s real estate landscape. The impressive total of property sale transactions in 2023, amounting to close to AED410bn, solidifi es the robustness of the market. The heightened demand for proper- ties is expected to increase [this year], owing to the launch of various new primary projects attracting a lot of investors from across the globe,” he added. The surge in property prices is attributed to factors such as robust economic recovery, attractive invest- ment opportunities, and an infl ux of both local and international investors. Key districts that captured investor interest include Jumeirah Village Circle (JVC), Business Bay, Dubai Marina, Downtown Dubai, and Dubai Silicon Oasis (DSO).54 Vol. 25/03, March 2024 SPECIAL REPOR T Popular areas and transaction prices (Average yearly rent change) Al Nahda • Transaction price – AED45,613 (7.02 percent) • Studio apartment – AED30,000 (16.7 percent) • One-bedroom – AED39,000 (9.73 percent) • Two-bedroom – AED51,000 (8.39 percent) Deira • Transaction price – AED46,738 (5.64 percent) • Studio apartment – AED29,000 (0 percent) • One-bedroom – AED45,000 (4.52 percent) • Two-bedroom – AED68,000 (8.33 percent) International City • Transaction price – AED32,329 (10.7 percent) • Studio apartment – AED25,000 (7.76 percent) • One-bedroom – AED36,000 (9.21 percent) • Two-bedroom – AED54,000 (9.72 percent) Aff ordable apartments: International City takes the lead International City emerged as the top choice for investors seeking aff ordable apartments. The price-per-square-foot saw a 15.5 percent surge, averaging at AED583 in 2023. Investors also found Dubai Residence Complex and Dubai Production City attractive, with healthy ROIs of 7.90 percent and 7.32 percent, respectively. In the mid-tier segment, Jumeirah Village Circle (JVC) stood out, record- ing a seven percent increase in the price- per-square-foot, averaging at AED1,016. Dubai Silicon Oasis and Jumeirah Lake Towers also attracted mid-tier investors with competitive ROIs of 9.07 percent and 8.57 percent, respectively. Dubai Marina retained its position as the preferred destination for luxury apartment sales. The price-per-square- foot increased by 9.16 percent, averaging at AED1,737. Business Bay and Down- town Dubai also showcased strong inves- tor interest, with ROIs of 6.60 percent and 6.56 percent, respectively. DAMAC Hills 2 maintained its status as the top choice for budget-friendly villas, arabianbusiness.com 55 SPECIAL REPOR T witnessing a 10.7 percent increase in the price-per-square-foot, averaging at AED743. Dubailand and Dubai South also presented investment opportunities with notable rental yields of 7.90 percent and 6.51 percent, respectively. In the mid-tier segment, Jumeirah Village Circle (JVC) emerged as the preferred choice for investors, record- ing a 10.6 percent increase in the price- per-square-foot. Al Furjan and The Springs also attracted mid-range inves- tors with rental yields of 6.51 percent and 5.96 percent, respectively. Arabian Ranches garnered consider- able interest for luxury villa investments, with a 9.15 percent increase in the price- per-square-foot. DAMAC Hills and Dubai Hills Estate also showcased high- yield properties with ROIs of 7.08 percent and 5.54 percent, respectively. Popular areas and transaction prices (Average yearly rent change) Jumeirah Village Circle (JVC) • Transaction price – AED54,281 (14 percent) • Studio apartment – AED45,000 (15 percent) • One-bedroom – AED67,000 (19.3 percent) • Two-bedroom – AED94,000 (17.2 percent) Bur Dubai • Transaction price – AED57,574 (8.06 percent) • Studio apartment – AED38,000 (11.5 percent) • One-bedroom – AED60,000 (12.9 percent) • Two-bedroom – AED78,000 (19.68 percent) Dubai Silicon Oasis • Transaction price – AED45, 976 (10.07 percent) • Studio apartment – AED35,000 (16.7 percent) • One-bedroom – AED50,000 (22.3 percent) • Two-bedroom – AED73,000 (16.1 percent) Popular areas for villa rentals in Dubai (Average yearly rent change) Mirdif Transaction price – AED134,986 (2.61 percent) Three-bedroom – AED116,000 56 Vol. 25/03, March 2024 SPECIAL REPOR T (17.8 percent) Four-bedroom – AED137,000 (10.9 percent) Five-bedroom – AED155,000 (11.6 percent) DAMAC Hills 2 Transaction price – AED73,333 (16.5 percent) Three-bedroom – AED86,000 (27.6 percent) Four-bedroom – AED105,000 (32.2 percent) Five-bedroom – AED131,000 (24.4 percent) Dubai South Transaction price – AED112,656 (-3.23 percent) Three-bedroom – AED98,000 (5.53 percent) Four-bedroom – AED138,000 (-2.33 percent) Popular off -plan properties Investors seeking off -plan properties found diverse options. Notable projects included AG Square in Dubai Resi- dence Complex for aff ordable apart- ments, District 10 in Jumeirah Village Circle for mid-tier apartments, and Al Habtoor City in Business Bay for luxury apartments. For villas, Villanova in Dubailand, Al Furjan West in Al Furjan, and Alaya in Tilal Al Ghaf Dubai were among the top choices. In 2023, individuals seeking budget-friendly off -plan apartments in Dubai predominantly g ravitated towards suburban neighbourhoods. As per the information revealed in Bayut's 2023 Dubai market report, AG Square in Dubai Residence Complex emerged as the top choice for aff orda- ble off -plan apartments in the city. Additionally, investors expressed interest in Verdana 2 in Dubai Invest- ment Park and Laya Heights in Dubai Studio City as viable options for budget-friendly off -plan fl ats in Dubai. Off -plan apartments: Mid-tier vs. luxury Mid-tier - District 10 in Jumeirah Village Circle: This master-planned district was the top choice for off -plan apartments in the mid-tier segment. Other popular mid-tier areas: arabianbusiness.com 57 SPECIAL REPOR T Beverly Boulevard, Arjan, Se7en City (Jumeirah Lake Towers). Luxury – Al Habtoor City in Busi- ness Bay: This centrally located district attracted investors seeking premium off -plan apartments. Other popular luxury areas: St. Regis The Residences (Downtown Dubai), Emaar Beachfront (Dubai Harbour). Last year, aff ordable off -plan villas in Dubai neighbourhoods captured the attention of investors, according to the Bayut Market Report. Top picks for budget-conscious buyers: • Villanova in Dubailand stood out as the most popular choice. • Emaar South in Dubai South’s Resi- dential District and Camelia in DAMAC Hills 2 also attracted signif- icant interest. Investors seeking mid-range options turned their focus to established subur- ban communities: • Al Furjan West in Al Furjan emerged as the most coveted location for mid-tier off -plan villas. • Elie Saab in Arabian Ranches and Nad Al Sheba Gardens in Nad Al Sheba 1 were also popular choices within this price segment. Top choices for high-end off -plan villas in Dubai: • Alaya in Tilal Al Ghaf – This develop- ment combines contemporary villas with greenery and waterways, off ering an oasis within the city. • District One in Mohammed Bin Rashid City – Boasting expansive villas inspired by global destinations, this enclave off ers unparalleled amen- ities and exclusivity. Upsurge in rental prices The year 2023 witnessed a remarkable upswing in Dubai’s real estate market, with rental prices experiencing a surge across the affordable, mid-tier, and luxury segments. According to the Bayut report, the rental costs for aff ordable properties witnessed a surge ranging from 4 percent to 28 percent, mid-tier proper- ties repor ted upticks of up to 23 percent, and high-end properties saw an increase of up to 31 percent. The robust demand for rental prop- erties in Dubai can be primarily attrib- uted to the city’s overall economic recovery and growth. The infl ux of resi- dents, drawn to Dubai for work and residence, has signifi cantly elevated the demand for rental properties, thereby infl uencing the upward trajectory of rental prices. The combination of an increasingly attractive real estate market for inves- tors, growing demand, and limited supply has created ideal conditions for landlords. The trends and preferences show- cased in the report refl ect the dynamic nature of Dubai’s property landscape, off ering a comprehensive overview of the rental market across different budget categories. Key districts that captured investor interest include Jumeirah Village Circle (JVC), Business Bay, Dubai Marina, Downtown Dubai, and Dubai Silicon Oasis. Looking ahead to 2024 Dubai’s property market witnessed phenomenal growth in 2023, with sales transactions exceeding AED 409.8 billion and rental prices soaring across all segments. This trend is expected to continue in 2024 due to several factors, including: Robust economic recovery: Dubai’s economic resilience and attractive invest- ment opportunities are drawing investors and residents, fueling market growth. Increased demand: The infl ux of resi- dents seeking work and lifestyle oppor- tunities in Dubai is driving up demand for both rental and sales properties. Limited supply: With limited new supply in popular locations, competi- tion among buyers is expected to inten- sify, pushing prices even higher. The rental costs for affordable properties witnessed a surge ranging from 4 percent to 28 percent last year, according to Bayut58 Vol. 25/03, March 2024 Investing in waterfront properties in Dubai Although waterfront properties usually come at a higher investment bracket as compared to other property options, the rate of appreciation makes it a prime option for investors Investing in waterfront proper- ties in Dubai can off er excep- tional returns due to the city’s renowned reputation for luxury living and its stunning coastline. According to the recent market statistics, Palm Jumeirah, Dubai Marina, Business Bay and Jumeirah Lakes Towers (JLT) continue to remain areas with high rental and investor interest, all boasting waterfront views. Sheer demand for both rental and sale of waterfront properties means these will always be the first units to be sold or let. However, waterfront properties do exhibit a certain degree of resistance because of their limited supply, which makes them more exclusive and ensures a certain level of sustained demand. For many Dubai residents and tourists, there is a desire to engage in waterfront living, which often translates into higher demand and, consequently, increased property and resale values. Moreso, owning a waterfront resi- dence in Dubai isn’t just about acquiring a property; it’s about claiming a prestigious address synonymous with refi nement and distinction, according to experts. Each waterfront address symbol- ises a lifestyle coveted by discern- ing individuals seeking the epitome of luxury living in the Middle East. Even among waterfront properties, there are certain features that further enhance resale potential including private or direct access to a beach, infi nity pools, access to water sports, gated communities, exclusive neighbourhoods, security measures, entertainment distrusts and more. Waterfront properties are the prime locations in any city and as such owners always pay a premium for them, but these properties are also going to be the most in-demand from tenants and owner/occupiers, so the potential for appreciation is very high. This holds especially true for Dubai, which is world-renowned for its scenic beaches, exceptionally stunning waterfront properties and exclusive community living. Coveted address High-end living Rising demand Exceptional returns Ideal locationHear from legends who have successfully navigated the global business and economic landscape May 22, 2024 | 8am — 5 pm Armani Hotel, Burj Khalifa For commercial and event queries Tel: +971 4 444 3460 Email: events@arabianbusiness.comNext >