If you are looking to buy prime residential real estate in Dubai, now is the best time to grab a great deal. According to Savills’ World Cities Prime Residential Index (H1 2019), prime property prices in Dubai have fallen 20 per cent in the last five years because of the high levels of new stock and global economic uncertainty, making the emirate the third most affordable major city in the index for purchasing prime residential property. The report further states that Dubai is the fourth-best global hub for returns on investment (4.6 per cent) when it comes to prime residential rental yields.
“It is far more affordable to purchase prime residential property now due to lower transactional costs and overall lower prices when compared to other major cities,” says Swapnil Pillai, associate, research Middle East at Savills. “Investors are paying less for top-class specifications. Also, strong rental yields mean that long-term investors could generate robust annual returns.”
According to figures from Luxury Property, high-end villa prices in Palm Jumeirah dropped by 17 per cent from Dh28,655 per square metre in 2014 to Dh23,752 this year, while apartment prices fell at the same rate from Dh20,736 per square meter in 2014 to Dh17,154 this year. Emirates Hills and Dubai Marina saw steeper declines of 28.3 per cent. From Dh28,095 per square metre in 2014, Emirates Hills villa prices are now around Dh20,154, while from a high of Dh19,223 per square metre in 2014, Dubai Marina rates are now down to Dh13,774 per square metre.
“Warren Buffett, one of the world’s most iconic and prolific investors, believes that now is the time to invest in the Dubai luxury market and in this regard I agree with him wholeheartedly,” says Jason Hayes, CEO and founder of Luxury Property. “His simple property investment philosophy? To look for bargains in quality locations.”
In most established global cities, there is also high property tax, expensive upkeep cost and different types of fees, which all create negative equity, says Yahya Alkan, CEO of World of Wonders Real Estate Development (Wow Red). In Dubai, the annual rental yields, even for high-end properties, are enough to cover all maintenance costs and leave owners netting a positive income, he adds. “The emirate is home to some of the most prestigious and best real estate developments anywhere in the world. The demand for luxury property is maintained over many years, despite the overall performance of the regional and global economy,” says Alkan.
The luxury market grew by 3.24 per cent over the past quarter to Dh10.6 billion, according to analysis by Luxhabitat, with Arabian Ranches 1, Jumeirah Golf Estates and Downtown Dubai reporting the highest increase in transaction volumes of 45.5 per cent, 42.14 per cent and 40.49 per cent respectively. “While we expect the real estate market to continue to decline moderately towards the end of 2019, mainly due to supply and a slowdown in the growth of the largest economic sectors, we expect a healthy demand,” says Michelle Liddiard, luxury sales specialist at Luxhabitat.
Over 198,246 units are due to be delivered by year end, according to data by Property Monitor. These include 22,728 apartments, 6,410 villas and 6,050 town houses. “The W Residence on Palm Jumeirah is expected to hand over this year,” says Liddiard. “It is one of the most luxurious developments in Dubai, made up of mansion blocks, offering full sea views and huge spaces.”
Other newer options include Wow Red’s SLS Dubai Residences, a luxury residential development in Marasi Drive scheduled for handover in the third quarter next year. Citing strong demand, Alkan says the project expects yields of up to 8 per cent, as well as healthy mid-term capital appreciation. The developer also offers a seven-year profit-free post-handover payment plan. “The SLS Dubai Residence boasts one of the largest selections of units in a single tower development,” says Alkan.
Hayes also cites “super-prime” projects like the Royal Atlantis on the Palm Jumeirah. “There are beachfront developments such as Dubai Harbour, adjacent to Dubai Marina and Dubai Creek Harbour, which enjoys proximity to the famous Ras Al Khor Wildlife Sanctuary,” he adds. “In Downtown Dubai, Il Primo and Opera Grand that flank the impressive Opera house has broken ground and their deliveries are much anticipated. Fountain Views, which handed over in recent weeks, is proving to be an incredible luxury development.”