Dubai offers plenty of opportunities for both real estate investors and end users. There is a diverse range of properties available in the market with different price points and from varied developers. This allows buyers to compare different options based of various requirements, particularly with regards to price, location and size. Property Weekly examines housing options across three broad price brackets to help homebuyers and investors make more informed decisions.
Buyers can find only apartments for a price below Dh750,000. Ozan Demir, director of operations and research at Reidin, points to more affordable areas such as Dubai Silicon Oasis, International City, Jumeirah Village Circle (JVC) and Dubai Sports City for good options, which are mainly studios and one-bedroom units. “A studio unit in JVC would cost around Dh450,000, while a one-bedroom unit would cost around Dh720,000,” he says.
Rental scene: Areas that have a large concentration of affordable housing units mainly target the middle to low-income households. “The rentals currently available in the segment for a studio is between Dh30,000 and Dh50,000 and a one-bedder from Dh40,000 to Dh70,000,” says Demir.
Yield: Affordable freehold communities have the best yields in Dubai. Demir says a studio unit can deliver a gross yield of 8-9 per cent, while a one-bedder can offer a gross return of 7-8 per cent.
Buyers: “To take a mortgage on a property at this level you will need approximately Dh250,000, inclusive of fees,” says Lewis Allsop, CEO of Allsopp & Allsopp, of the upfront financial requirements. “First-time buyers, maybe an individual or a couple, can purchase. It’s also a good price range for investors looking for high rental yield.”
Demand: Allsopp says demand is strongest in this segment. “It’s the lowest price bracket in Dubai,” he says. “Therefore, you see the highest demand here. The options include apartments in Business Bay, JLT, Marina and JVC.”
Supply: Citing announcements by developers, Demir says approximately 8,000 studio units and 13,000 one-bedroom units are expected to enter the market this year, but the actual materialisation rate will be lower.
This segment offers a broader selection of properties with options ranging from larger residences in affordable housing areas to smaller units in high-end areas. There are also smaller town houses in this price bracket.
“Unlike the Dh750,000-below segment, investors and end users can choose from various types of units if they have the additional Dh750,000 in hand,” says Demir. “The purchaser has the option to buy a two- or three-bedroom unit in International City with prices from Dh830,000 to Dh1.1 million, a Dh1.25-million studio in Downtown Dubai and even a Dh1.4-million town house in Jumeirah Village Triangle.”
Rental scene: The rents vary from area to area leading to a broader range of available rents. “A studio is between Dh45,000 and Dh105,000; one-bedder from Dh50,000 to Dh120,000; two-bedders from Dh60,000 to Dh115,000 and three-bedders from Dh75,000 to Dh125,000,” says Demir.
Yield: A studio apartment in this segment can provide gross yields of 6.5-8 per cent, while a one-bedroom apartment offers yields of 7-8 per cent, says Demir. Larger units like two-bedroom apartments can generate yields of 6.5-7.8 per cent. A three-bedroom apartment can provide returns of 6-7.4 per cent.
Buyers: Allsopp finds a large cross-section of buyers in this price point. “We can still find first-time buyers as well as investors, who will have a slightly bigger budget to play with,” says Allsopp. “You will need approximately Dh250,000-Dh500,000 as cash in hand if you are looking to purchase with a mortgage. The main difference is that you will be able to look in different buildings, get larger properties or a view.”
Demand: Allsopp notes a significant demand in this segment. “Town Square, in particular, is attracting a lot of attention, and there are options in the best locations such as Downtown, Marina, Palm Jumeirah, JLT, JBR, The Greens and Views, JVC, Motor City and in all of the prominent apartment areas in Dubai.”
Supply: As per announcements by developers, Demir says approximately 18,800 units are expected to enter the market this year in this segment, but the actual materialisation rate will be lower.
Above Dh1.5 million
With Dh1.5 million an investor or end user can get options for larger apartments in high-end areas such as Downtown, Palm Jumeirah and Dubai Marina to town houses and villas across all the other areas in Dubai. Demir says there are one-bedroom apartments in Downtown Dubai that cost Dh1.78 million, while bigger three-bedroom town houses in Jumeirah Village Circle can cost Dh2 million.
Rental scene: Investors in this price band can choose from larger apartments in high-end communities to virtually any type of town house or villa across Dubai. Therefore, Demir says there is a broader range of rents available in this segment. “The apartment rentals are currently Dh75,000-Dh180,000 for a one-bedroom apartment, Dh80,000-Dh280,000 for a two-bedroom apartment and Dh85,000-Dh380,000 for a three-bedroom apartment,” he says. For villas and town houses, the rents range from Dh105,000-Dh300,000 for three-bedders, Dh120,000-Dh450,000 for four-bedders and Dh150,000-Dh650,000 for five-bedders.
Yield: “Apartments in this segment can provide yields of 4.9-7.1 per cent, while for villas or town houses an investor can expect yields of 3-6.5 per cent,” says Demir. “The villa asset class is known to provide lower yields when compared to apartments due to the nature of the investment.”
Buyers: Allsopp says buyers in the segment will be families, either upsizing, moving from an apartment to a villa or buying their first home. “You also have the super luxurious properties, and there are incredible penthouses or mansions in exclusive communities that will sell for tens of millions of dirhams.”
Demand: As you move up the price ladder, Allsopp says the demand slowly drops off because of affordability issues. “There are a lot more people who can afford to buy at Dh1.5 million than at Dh15 million, so naturally the levels of demand will reflect that,” he says. “Everything is available to you in this price range, from a villa or apartment in any community you can think of, to super villas or penthouse apartments with the most amazing views.”
Supply: As per developer announcements, Demir says approximately 11,000 units are expected to enter this segment this year, but the actual materialisation rate will be lower.