Luxury and suburban areas in Dubai have gained traction as tenants take advantage of favourable prices and upgrade to established neighbourhoods, according to a new report.
Dubai’s property market presents good conditions for buyers, investors and renters alike, said the Q3 2019 market report from property website Bayut.
A recent Dubai Land Department (DLD) report confirmed the value of real estate transactions in the emirate has grown by 12 percent in 2019, compared to the same period last year.
Communities such as Palm Jumeirah, Dubai Marina, Downtown Dubai and Jumeirah Village Circle are at the forefront for sales, while established areas like Al Nahda, Dubai Marina, Mirdif, Bur Dubai and Jumeirah lead the rental market.
Based on the comparison of prices from Q3 of 2019 to Q2 of 2019, there are moderate declines in average price per square foot across the board for properties on sale.
However, suburban areas such as Dubai Sports City and Dubai Silicon Oasis are gaining traction with investors, and have experienced only minor price decreases.
This trend chimes with the rising demand for cost-effective properties, especially from first-time buyers, who made up 66 percent of the total investors in the Dubai real estate market for 2018 as per DLD’s findings.
Dubai Marina is the most popular area for apartment sales, while Palm Jumeirah continues to attract the highest number of buyers and investors for villas.
Most sales areas have exhibited moderate declines between four to six per cent, with some suburban neighbourhoods such as International City, Dubailand and Mudon showing stability.
In terms of the average sales price per square foot for both apartments and villas, the luxury area of Palm Jumeirah experienced a notable decline.
For apartment sales, the average price per square foot went down by eight percent from AED1,426 to AED1,311. Villa sales saw a decline of 6.6 percent from AED2,358 to AED2,201 in the third quarter of 2019.
In terms of ROI, International City maintains the highest ROI of 9.4 percent for apartments, while the affordable community of Jumeirah Village Circle offers rental yields of 6.8 percent for villas.
Meanwhile, in the rental market, tenants are taking advantage of affordable prices to move to more upscale areas or upgrade to larger units in established neighbourhoods.
Overall, apartments and villas for rent in Dubai have experienced declines in average costs of between two and six percent.
Al Nahda and Dubai Marina retain their positions as the most popular areas among potential tenants looking for apartments, and Mirdif takes the lead with those interested in villa rentals.
Within the rental apartment sector, the most significant changes are for one-bedroom units in JVC, where the average cost has dipped by 7.4 percent.
Similarly, studios in Dubailand, Dubai Silicon Oasis, and Al Nahda have seen rents decline around the six percent mark. In contrast, two-bedroom units in budget-friendly locations such as Deira have seen costs increase by a 2.1 percent margin.
Tenants planning to upgrade to villas, but still looking for something affordable, should note that the most noticeable decline is for 3-bedroom villas in Jumeirah, where the average cost has dropped by 6.1 percent, the report said.
However, average rents have gone up for certain units in suburbs such as Reem, the townhouse community in Arabian Ranches, and Al Barsha, by six percent and 2.9 percent respectively. This can be attributed to more tenants exploring the opportunity to upgrade to villas, creating an increased demand for such units.
The popularity of emerging communities such as Mudon, Arjan and Al Furjan have elevated overall interest in Reem and Al Barsha.
There has also been a notable uplift in interest in areas close to the Expo 2020 site, such as Dubai South and Akoya Oxygen.
Off-plan projects in high-end areas such as Palm Jumeirah, Mohammed Bin Rashid City and Dubai Hills Estate are also attracting attention with investors and potential homeowners for their affordable payment plans and lifestyle, the report said.
Haider Ali Khan, CEO of Bayut, said: “We have also observed record-breaking traffic on Bayut with the total views exceeding 88.5 million in the first half of 2019. This points to a steady interest from home buyers and investors in the Dubai property market.”
Khan added: “We’re also seeing the Dubai government take proactive steps to safeguard the interests of investors and tenants and put forward policies to ensure value and competitiveness in the real estate sector.”For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.