Dubai residents prefer suburbs and villa communities to high-density apartments

The pandemic has seen end-users with financial means, particularly those with families, moving out of high-density apartment buildings and migrating to established villa and townhouse communities in search of properties with private gardens and outdoor spaces, say real estate experts. Zhann Jochinke, chief operating officer of Property Monitor says, “With memories of movement restrictions and lockdowns fresh in the minds many people, demand for these types of properties have surged. Moreover, with property prices near historic lows (the result of a six-year price decline) these properties are now affordable to a wider range of end-users,” he says.

A new survey from ServiceMarket also points to this, highlighting a recent trend of residents moving to the suburbs rather than preferring to live centrally in the city. The survey has assessed the effects of the Covid-19 pandemic on the moving patterns among Dubai residents. Dubailand and its suburbs, comprising multiple projects such as Town Square, Mira Community, Akoya Damac, Remraam, and Arjan, came top of the list with approximately 12.1 per cent of all moves. In comparison to last year, the number of move-in requests received for Dubailand has increased by 30 per cent.

Town Square has seen thousands of residential units being handed over last year, followed by an influx of residents to these spacious villas and high-rise apartments. Mira Community, the second most popular project in Dubai’s suburbs, has managed to retain its position among the top three most popular suburban areas. Akoya Oxygen by Damac has also seen a significant increase in the move-in requests in one quarter alone as opposed to the whole of 2019.

Jochinke says end-users have been purchasing ready properties in both established communities and those recently handed-over. In the third quarter there was a significant volume of transactions by end users in Nad Al Sheba Villas in Nad Al Sheba 3, Arabella in Mudon, Al Furjan Villas in Al Furjan, and across several projects in the Town Square development by Nshama.

Rental rates

The ServiceMarket report says the trend to move to the suburbs has been due to the fact that rental rates per square foot in the suburban areas are lower as compared to other areas within the city. Rental rates of three-bedroom villas in Akoya Oxygen are around Dh66,000 while similar sized units in areas closer to the city’s center, like Jumeirah are around Dh157,000.

Properties in the suburbs are not only lower but also offer more space. Many of the suburbs offer townhouses and villas with spacious gardens and more rooms, a useful feature during the pandemic when most people either worked from home or opted for distance learning in which case they require a home office or a separate room for studying.

Positive steps taken

Aditi Gouri, head of strategic consulting and research, Cavendish Maxwell, says new laws recently introduced by the Dubai government will increase investment appetite. “After introducing the ‘Retire in Dubai’ scheme, the government has launched other programmes to increase the appeal of Dubai and the wider UAE as the residence of choice for people around the world.

To further encourage expats to move to Dubai, most recently, the government amended personal and family laws which now allow unmarried couples to live together and allow expats to follow their home country’s laws on divorce and inheritance. These moves send a strong message to the world about the UAE’s willingness to attract various cultures and nationalities to comfortably settle here, says Gowri.

The government’s recently declared an economic stimulus package of AED 500 million, taking the total stimulus extended to AED 6.8 billion, will also have a positive impact. Jochinke says, “Short-term boosts to liquidity and lending by the Central Bank and regulators have undoubtedly helped to support prices and will continue to underpin asset prices. Investors value tangible ‘safe-haven’ assets and strong yields in a low interest rate environment – something which Dubai offers. However, these short-term measures are unlikely by themselves to change the longer-term outlook. We believe prices will increasingly depend on the appeal of individual communities. Locations will be polarised and split between those enjoying favourable demand and others facing a bearish outlook. Buyers will choose with care and brokers will price accordingly.”