Dubai real estate: Is waterfront better than other properties? Experts weigh in

“Investing in waterfront properties can offer exceptional returns due to the city’s renowned reputation for luxury living and its stunning coastline,” said Sean McCauley, CEO of Devmark in an exclusive interview with Arabian Business.

As per 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.

Despite their higher upfront cost, waterfront properties tend to appreciate in value at a faster rate, making them a prime option for investors seeking long-term returns.

“Typically, waterfront properties are the prime locations in any city and as such you’re always going to pay a premium for them, but they’re also going to be the most in-demand from tenants and owner/occupiers – so the potential for appreciation is very high,” said Simon Baker, Managing Director, Haus & Haus Real Estate.

“This holds especially true for Dubai, which is world-renowned for its scenic beaches, exceptionally stunning waterfront properties and ‘exclusive’ community living,” added Ainsley Duncombe, Founder of Off-Market Listing (OML) Dubai.

According to Duncombe, numerous factors add to the appeal of waterfront units:

• Limited supply: Waterfront properties are typically limited in supply, making them more exclusive and desirable.
• Tendency for long-term appreciation: Waterfront properties tend to appreciate well, driven by the increasing demand for prime locations, scenic views and a sense of “exclusive” living.
• Guaranteed rental income: Waterfront properties often ensure guaranteed and continuous rental, due to their prime locations and desirability by residents and tourists alike.
• High level of tourism: In a city like Dubai, waterfront properties also benefit from the thriving tourism and hospitality industry. Tourists and visitors are often drawn to waterfront areas, creating potential opportunities for short-term rentals or vacation homes.

Are waterfront properties resistant to market fluctuations?

Combining Dubai’s status as a global hub for business, tourism, and luxury living, real estate experts believe waterfront properties offer stability in volatile markets due to factors like high rental yields, consistent demand, and exclusivity.

“Sheer demand for both rental and sale with waterfront means they’ll always be the first units to be sold or let,” Baker explained.

However, Duncombe believes that even though market fluctuations may affect all investments to a certain degree, “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.”

Although these properties display increased resistance, “economic downturns or geopolitical factors can still impact their value to some extent,” McCauley said.

Benefits of owning waterfront properties

Does being located on a waterfront offer better resale value for properties? Baker believes so, “Looking at the building overall, if it’s located by the water then it’s that well-known case of ‘location, location, location’ – there is no doubt it is going to positively affect the value,” he said.

“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,” Duncombe explained.

Although waterfront properties are considered wise investment decisions due to their resale values, McCauley highlights another factor that plays a key role in driving demand for these property types – “claiming a prestigious address.”

“Owning a waterfront residence in Dubai isn’t just about acquiring a property; it’s about claiming a prestigious address synonymous with refinement and distinction,” McCauley said.

“Whether it’s a duplex apartment on Palm Jumeirah’s crescent or a chic apartment in Dubai Marina, each waterfront address symbolises a lifestyle coveted by discerning individuals seeking the epitome of luxury living in the Middle East,” he added.

However, with the rising popularity of these property types, supply reduces, leading to heightened competition among buyers and investors, McCauley highlights. The increased competition and demand are leading factors for rising property prices and rental rates.

Earlier this year, Arabian Business reported that Dubai real estate rents could jump by up to 20 percent this year as buyers increasingly look for short-term returns, according to forecasts from Colife. The upward momentum is expected to persist in the coming year.

Even among waterfront properties, there are certain features that further enhance resale potential including private or direct access to a beach, infinity pools, access to water sports, gated communities, exclusive neighborhoods, security measures, entertainment distrusts and more.

According to Baker, there has been a significant increase in the expectations of end-users in terms of facilities and amenities.

“A few years back having a gym and a pool would have been more than acceptable, now it is the absolute minimum people expect,” he explained, describing current expectation levels as “through the roof.”

“Now want fabulous amenities and lobbies that look like 5-star hotels,” he added.

Duncombe offered an exclusive insight into the preferences for amenities and features among the affluent, specialising in confidential deals with high-net-worth individuals and celebrities, he explained that, panoramic views of the water, private or direct access to a beach, access to water sports, gated communities or exclusive neighborhoods with additional security measures, proximity to cultural attractions, entertainment districts, and iconic landmarks, are in high demand.

“We’ve successfully negotiated on behalf of celebrities, footballers and members of the Royal Family and I can confidently say that the one thing they all have in common, is their desire to have the majority of the items listed, as part of their property,” he revealed.

“By prioritising amenities that cater to the preferences and aspirations of affluent buyers, developers can ensure that waterfront properties remain highly coveted assets with enduring value and strong investment potential,” McCauley said.

Downsides of owning a waterfront property

Owning a waterfront home promises numerous advantages, but potential downsides should be carefully weighed before taking the plunge.

One of the most common downsides faced by most waterfront homeowners and residents is the effect of exposure to saltwater, humidity and other environmental factors which eventually adds to the maintenance cost of the property.

Duncombe states that the two most important considerations to keep in mind for those seeking to invest in water-facing homes are high purchasing cost and additional maintenance considerations due to environmental factors including saltwater exposure.

However, Baker says, “With modern construction methods and high-quality materials there should be very few downsides or increases in maintenance.”

“Obviously, service charges are paid to the developer and they’re dependent more on the level of quality in the finish and the amenities provided,” he added.

Overall, the current and demand for waterfront homes, especially with the rise of tourism and short-term rentals in the city, will continue to persist with the upward trajectory expected to continue in the coming year.

“There is always going to be high rental demand,” Baker said.

Conducting market research was highlighted as the main factor of consideration for investors.

“The most important thing is to thoroughly research the market to understand the pricing trends of waterfront properties in different areas of Dubai and ensure that your property agent is able to negotiate with the seller to achieve a fair purchase price,” Duncombe concluded.