Homes in Dubai are getting a facelift – that is one of the biggest trends we have noticed across the city.
This has been especially noticeable in Jumeirah Islands, a community that used to fly under everyone’s radar and was considered a hidden gem as recently as three years ago. As the property market scaled new heights post-Covid, Jumeirah Islands was one of the areas that saw increased interest, offering a more reasonably priced alternative to its super prime counterparts such as Emirates Hills and Palm Jumeirah.
Today. Jumeirah Islands sits very comfortably in the prime property space, and you can easily find an upgraded home there at the same price as a much older Emirates Hills villa. We have started to see this trend take off in Dubai Hills Estate as well – particularly Maple and Sidra – and I don’t think it will be too long before every masterplanned community has a spike in renovations.
Old is gold - but new is where money is
The simple fact is that a newer home holds a higher value and commands a greater premium. It doesn’t matter if the property is 10 years old or three - if work has been done to enhance it then it will be worth more than a standard unit.
Using Jumeirah Islands as an example, entire clusters have been renovated and upgraded to the highest specifications – some with extended plot areas and additional custom features. The community itself has also undergone a massive overhaul, with newly landscaped outdoor spaces, aesthetic enhancements, and a stunning clubhouse.
It has become the go-to option for buyers who are feeling priced out of the Palm but still want a high-quality waterfront home. As a result, the sales price per square foot in the community has risen over 300 per cent since the first quarter of 2019.
Upgrades determine price points
How much does the value of one’s property increase after upgrading? It’s hard to pin down an exact figure on that, as it really depends on the level and quality of work that’s done.
The term ‘upgrade’ or ‘renovation’ is quite broad – it could refer to something as relatively simple as the installation of new flooring, or a more extensive process where the owners have essentially stripped the property bare and redone all of it. In some areas, upgrades could easily double the value of a property – Al Barari is a perfect example, where some of the ‘standard’ villas were available for under Dh25 million and can now command over Dh50 million after a full renovation.
Even if you factor in the cost of the work that went into the home, there is a hefty profit to be made on a resale.
It's important to note, however, that cost doesn’t necessarily translate to value. If you decide you’re going to spend Dh1 million on refitting your home and adding in new features, that doesn’t mean you’ve just increased the sale price of your home by a million. You need to take a good look at what will make the home appealing for future residents, and actually enhance its value to offset the costs involved before you dive into getting any work done.
Renovations have flipped the market
Roughly two years ago, there was a surge of interest in established residential communities like Emirates Living and Arabian Ranches, as they were falling into a more affordable bracket compared to their recently handed over counterparts. Buyers who might have been targeting communities like Sidra and Maple in Dubai Hills were now looking at older options that still ticked all of the major boxes in terms of location and amenities. As a bonus, the older properties were also larger, providing more value on a per square foot basis.
After some time when they had saved up a bit more, they were in a position to star upgrading those homes and to add in features that suited their lifestyles.
Investors were particularly drawn to those communities, sensing opportunities to buy up a property that was at least 10 years old which they could renovate and flip for a premium. It was a strategy that paid off quite well, leading to record transactions in a few communities.
What that has effectively done is drive down the supply of standard homes and created a larger supply of renovated homes. There is now a very competitive market for upgraded properties among ready buyers. While the prices of standard properties are creeping up as owners have become wise to the game and are willing to invest in minor upgrades – just enough to add value and still be able to sell at a profit.
The one word that I think defines the current real estate market is ‘opportunity’. New communities like Elan in Tilal Al Ghaf and Joy in Arabian Ranches III have started to hand over, and there are more handovers to come throughout 2024. Buyers who are moving into these areas will, after a few years, have money saved up to start renovating if they choose.
We are in a cycle now where you will always find an ‘old’ property in Dubai. Properties that were bought in 2022 and early 2023 have been upgraded and are hitting the market now with sleek new looks; by comparison, properties that were handed over 5 short years ago are starting to show signs of age and may start getting renovated very soon.
This constant tug of war between ‘old’ and ‘new’ will help to keep prices fluid and keep competition high amongst buyers, resulting in an active and healthy market.