If you’re thinking about investing in Dubai, where do you buy?
Dubai is a real estate market that is home to 3.5 million residents and at least a dozen distinct districts that all have pros and cons from an investment perspective.
We’ll highlight some of them here, but feel free to talk to us about the investment potential of any area within Dubai.
Any overview of the best areas to buy property in Dubai should include the major districts such as Downtown and Business Bay, but because Dubai is a fast-paced market full of institutional investment and major infrastructure projects, new opportunities are arising constantly. With this in mind, we’ll also provide an overview of some new markets that are currently very popular with investors seeking to buy Dubai real estate at the start of a growth curve.
Investment locations: Mature markets in Dubai
Here we’ve selected the very best of Dubai real estate, the markets that have been proven over the last decade or more. These areas have provided investors with stable and impressive capital growth while thriving rental markets have produced high rents and low volumes of void periods.
Because these markets are more mature, you’ll also find both a higher variety of properties to suit different tastes and budgets, and more potential buyers should you wish to exit.
Dubai Marina is consistently one of the emirate’s top-performing property markets with investors regularly achieving double-digit capital appreciation and high yields.
Over the past 12 months, there have been in excess of 3,000 apartment sales across Dubai Marina. That’s an increase in demand of roughly a third and has resulted in asking prices rising around 10%.
Rental rates continue to rise as the Marina is now home to over 55,000 people, most of them looking to rent an apartment. As such, annual yields sit at around the 6% mark currently.
As well as its status as one of the top performers, Dubai Marina is also one of the most mature real estate sub-markets having risen to prominence back in the early 2000s.
Consequently, most of the assets that do become available are completed, revenue-generating properties. Off-plan opportunities are still numerous, but due to the demand, apartments are normally acquired shortly after sales launch.
Ever since it was renamed from Umm Al Tarif in 2000, Downtown Dubai has been at the centre of the emirate’s real estate market.
It has some of the most expensive assets in Dubai, but those assets are also currently generating some of the strongest growth. On average, property in Downtown Dubai has recorded 10% capital growth over the past year.
When it comes to the rental market you’ll find the average annual yield is 5.5%, but that is only half the story. From a residential perspective, Downtown Dubai is much smaller than Dubai Marina being home to 13,000 people – however, it is more popular with tourists. Investors who market their rental property towards shorter-term lets can achieve much higher yields.
The last 12 months have seen an increase in transaction volumes of 170% in Downtown and although this reflects the growing supply of new units, it is also a reminder to potential investors that units will not stay on the market for long.
Much more affordable than neighbouring Downtown, Business Bay has probably been the standout real estate market in Dubai over the past few years.
It straddles both banks of the AED 3.7 billion Dubai Water Canal and is a fully master-planned, mixed-used location comprising commercial offices and luxury living. In fact, almost 4,000 properties were sold in Business Bay last year.
The market does now have a slight oversupply issue with many developments simultaneously coming onto the market and although the Business Bay real estate is now slowing slightly, investors could still expect strong future performance. In part, this is because Business Bay is one of the newer stellar markets across Dubai and still has a lot of expanding to do until it is home to the planned 190,000 residents.
The iconic man-made archipelago is the most expensive place to buy property in the whole of Dubai.
It is also one of Dubai’s hottest villa markets right now. Investors have just observed a 45% rise in values over the past year or so as high-net-worth individuals from all over the globe looked to relocate during the pandemic.
Now the average villa price on The Palm is in the region of US $5 million. Unsurprisingly this huge growth in asking price has taken its toll on yields. You can now expect an average yield of around 3.5%.
Again, due to its popularity with tourists properties on The Palm can make substantially more rental income if investors are willing to enter the short-term let market.
Investment locations: Emerging markets in Dubai
More seasoned investors who may have existing properties in Dubai are currently diversifying to a few select emerging locations across the emirate.
The advantages of an emerging market to an investor are numerous. Asking prices and sq ft prices tend to be lower – which may also appeal to new investors with more reserved budgets – with more potential for future growth. Conversely, the drawback with these markets is the inherent risk is higher. Void periods may be more pronounced, or a lower demand when it comes to exit may curtail capital gains. That said, over a mid to long-term period these markets are expected to become more mature and attractive to a wider range of tenants and investors.
Until recently the 145 sq km named as Dubai South was best known as the site of Dubai’s second airport Al Maktoum International Airport.
Although its strategic location next to an international airport, and within close proximity to the Jebel Ali seaport, means it will always be a commerce-first location, the sheer scale of growth here will make it an important real estate market in the coming years.
Situated between Dubai and Abu Dhabi, the project is important to the whole UAE and is a pivotal pillar of future economic prosperity – so much so that the multi-phased masterplan has been coined “The Centre of Tomorrow”.
The free economic zone will feature apartments, townhouses and villas that’ll mostly be found in Residential City. Almost 1,400 residential units have already been completed at The Pulse and over time, it is thought the area could be home to a million people.
Investors seeking emerging property locations that are closer to the existing Dubai hotspots could consider Emaar Beachfront. This is a new scheme that is found just one minute from Dubai Marina and only 15 minutes from Downtown Dubai. Furthermore, many of these beachfront apartments will be overlooking The Palm.
Part of the multi-billion dollar Dubai Harbour development, Emaar Beachfront is a new, exclusive, luxury coastal community that stretches over a near kilometre of pristine white sand.
Eventually, investors will have a choice of 27 prestigious towers – the first of which, Beach Vista, offers a podium-level swimming pool that connects to the two core spires.
In time, the whole area will comprise over 10,000 new apartment units.
Dubai Water Canal
The project that originally replaced the old Dubai Creek, which historically split Dubai into Deira and Bur Dubai, is now making waves in the real estate market.
Dubai Water Canal connects Business Bay to the Arabian Gulf and now investment and commerce is flowing out from Business Bay to other areas along the 3km waterway.
Safa Park and the Peninsula, which extends Jumeriah Beach at the very end of the Canal, are two such emerging markets investors have on their portfolio radars in the coming months and years.
Seeking to acquire Dubai real estate?
At Chestertons, we’ve many years of experience operating in the Dubai property market, helping investors acquire assets in all the major sub-markets within the emirate. We have extensive knowledge of all the mainstream and specialist developers operating within each of these markets and can help any purchasing decision that you, as an investor, may have.
If you have questions about investing in property in Dubai, please contact us by clicking below.