Buying property in Palm Jebel Ali should be a long-term investment
Investors with shorter timeframes in mind need to look elsewhere in Dubai
It would be an understatement to say that there is a very healthy appetite for luxury real estate in Dubai. According to the latest figures, properties priced at $10 million (around Dh37 million) or higher fetched a combined $1.5 billion (almost Dh6 billion) over the third quarter.
Palm Jumeirah and Emirates Hills dominated that space, joined by Jumeira Bay Island to round out the Top 3 areas. With all the buzz that has surrounded Palm Jebel Ali over the past few months, could it one day be joining that pantheon?
Based on how quickly its first launch sold out, that seems likely to be the case. But there are several intricacies to the market that need to be considered as the project continues to develop.
An abundance of options
Dubai’s real estate landscape is experiencing something of a golden age, offering a variety of choices to suit any lifestyle. Are you a fan of golf? You can find fantastic options in Dubai Hills Estate, Emirates Hills, or Jumeirah Golf Estates.
Prefer a quieter family neighbourhood? You have the likes of Arabian Ranches 2, the Emirates Living communities, and Damac Hills 2. When it comes to waterfront living, the choices are even more diverse, running the gamut from Dubai Maritime City to the Palm Jumeirah fronds.
When it comes to waterfront living, the choices are even more diverse, running the gamut from Dubai Maritime City to the Palm Jumeirah fronds.
If we roll the calendar back by 20 years, Palm Jumeirah was the only real choice for buyers or investors seeking a premium waterfront residence. It sold incredibly well because it was the first project of its kind and offered a very exclusive address.
There is a broader choice of waterfront homes in Dubai today, especially around the $5 million (Dh19 million) price point, which is the starting price for villas on Palm Jebel Ali. Following on from the Palm Jumeirah’s example, we have man-made islands such as Pearl Jumeirah, Jumeira Bay, Bluewaters, and Emaar Beachfront.
The Marina and JBR offer some very premium properties such as 1 JBR and Cayan Tower. And even communities located inland - like Tilal Al Ghaf, District One, and the recently launched Oasis – offer villas surrounding beautiful man-made bodies of water.
Buying for long-term goals
The Waterfront is a highly competitive space in terms of demand, but even then, the closest true comparison to Palm Jebel Ali is Palm Jumeirah. Buyers are banking on Palm Jebel Ali fulfilling its promise of being bigger and better than its predecessor – I firmly believe it will.
However, the most important advice I would give investors looking at Palm Jebel Ali right now is to ensure that their planned investment matches their strategy. There are several early adopters who want to buy up the most prime villa units along the fronds, and especially the frond tips.
The expectation, of course, is that those units will grow in value over time to command premiums similar to what we see on Palm Jumeirah. But are investors aware of the timescales involved?
If you were to pick any other new project that’s being released in Dubai – the Signature Mansions in Jumeirah Golf Estates, for example – you have a good idea of the surrounding communities and their infrastructure.
The JGE is a well-established neighbourhood that offers plenty of amenities for its residents and provides easy access to other major areas of Dubai. Palm Jebel Ali, which is still very much in its infancy, doesn’t have that infrastructure in place yet.
Keep these factors in mind
The island is far removed from the centre of the city, in much the same way that a community like Arabian Ranches felt so far away over a decade ago. It covers a larger area than Palm Jumeirah, will have an entirely different sort of supply, and may not launch any non-residential projects for a while. Let’s not forget that Palm Jumeirah didn’t have its own shopping mall until 2019 – nearly 13 years after its first residents moved in.
What all this adds up to is an investment that needs time to mature. If your investing goals involve a quick flip or rental income generated within the next few years, then Palm Jebel Ali may not align with that strategy.
Could returns be higher than the market average? Certainly, but the fact is that it’s too early to tell at this stage. While it’s possible to draw parallels with Palm Jumeirah, a credible comparative analysis can’t be performed until there has been further development on and around the island.
Investors who are patient and are in it for the long haul will be the ones to benefit from what Palm Jebel Ali has to offer.