The emirate recorded a 76.3% year-over-year increase in off-plan registrations for residential properties last month, according to findings of the “ValuStrat Price Index – Dubai Residential Capital Values,” with communities like Jumeirah Village Circle and Meydan One driving up demand.

The study also revealed that the highest number of off-plan homes traded in a single month occurred in May at Discovery Gardens and Dubai Hills Estate, both of which broke their own records.

With the majority of homes sold in Jumeirah Village Circle (8.3%), Business Bay (6.6%), Dubai Marina (5.9%), Downtown Dubai (5.3%), and Jumeirah Lake Towers (3.9%), the volume of ready home transactions has also increased by 8.1% since April and 45.9% since 2023.

The ready properties in Palm Jumeirah, Dubai Marina, Jumeirah Bay Island, Emirates Hills, and District One totalled 16 transactions with prices exceeding 30 million UAE dirhams.

Capital Values

According to ValuStrat, despite the unprecedented deluge that caused flooding in several communities in Dubai due to April’s record rainfall, the strong demand for residential properties prevented any major impact on home valuations.

The month of May saw similar monthly growth rates in villa capital values, with properties in Palm Jumeirah experiencing an annual capital value increase of 41.7%.

The other notable annual gains were at Jumeirah Islands (41.1%), Emirates Hills (37.5%), Dubai Hills Estate (32.5%), and the Lakes (32.1%). Although the majority of Dubai’s well-established villa communities have surpassed their 2014 capital value peaks, Palm Jumeirah became the first apartment complex to do so this month, according to ValuStrat.

There was a record annual growth of 22.4% in apartment prices, with a monthly increase of 11.8%, or 0.2% higher than in April. Areas like Discovery Gardens (34%), the Greens (32.6%), Palm Jumeirah (30.9%), Al Quoz Fourth (29.1%), and the Views (28.1%) had some of the highest apartment capital gains over the prior year.

In addition, the VPI report revealed a direct contrast between the steadily increasing average price per square foot and the decreasing average home size in Dubai, which has led to concerns about property valuations.

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According to a new analysis by property portal Bayut.com, properties in these areas provide the most alluring return on investment (ROI) within the luxury and budget divisions.

Projections suggest that residential properties in Dubai Marina will have the best rental returns for luxury apartments at 7.04%. In comparison, apartments in International City will have the highest returns in the budget class at 9.22%.

For those looking for affordable villas, Jumeirah Village Circle will be worth considering because it produced the most alluring ROI of 6.9% in 2022.

According to Bayut, houses in the area have provided the “healthiest” rental yields of 6.95%, making DAMAC Hills a viable choice for those looking at buy-to-let villas.

Appealing Location

For many investors, purchasing rental homes has been a popular choice. The UAE is a desirable location for investment due to the nation’s comparatively cheap tax structure, attractive sales prices, high tenant demand, and high-quality infrastructure and way of life.

Rents for apartments and villas have increased significantly over the past year due to the high demand.

Asking rentals for apartments increased by 39% alone in Dubai Marina. Currently, the average rent in the region for a one-bedroom apartment is AED91,000 (USD 24,775); for a two-bedroom apartment, it’s AED140,000; and for a three-bedroom house, it’s AED207,000.

Dubai Marina has become one of the most sought-after areas for potential purchasers looking for luxury residences.

According to Bayut, other well-liked areas in Dubai include Downtown Dubai, Arabian Ranches, and Dubai Hills Estate.

“Tenants looking for luxury apartments in Dubai have continued to be attracted to the properties in Dubai Marina during 2022,” the property portal remarked.

Affordable Housing

The cost of renting a flat has dramatically increased in Jumeirah Village Circle, a desirable location for tenants in the lower income bracket, by 14% to 24% in 2022.

In the previous year, renters were required to pay, on average, about AED36,000 for a studio apartment, AED51,000 for a one-bedroom apartment, and AED 73, 000 for a two-bedroom apartment.

Three- and five-bed apartments in DAMAC Hills 2 now cost about AED63,000 and AED98,000, respectively, due to a 9% increase in rent. According to Bayut, annual rates for four-bed homes “became more affordable” by 5.3%, with an average of AED74,000 in 2022.

However, retail prices have also increased. According to Bayut’s estimates, sales prices for condos and villas in Dubai’s most prestigious neighbourhoods will rise by 2% to 24% in 2022.

According to transaction data issued by the Dubai Land Department, Bayut, the demand for real estate in Dubai has continued to increase.

The real estate market has “outperformed expectations over the last year, with record-breaking transactions, attractive new launches, and favourable investment opportunities,” Bayut added.

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