Metro Influence, ‘Unfreezing’ Old Projects And More Luxury Real Estate: Dubai Property Market Is Gaining A New Momentum
by Arnab Dey Real Estate 25 October 2022
Property in Dubai
With the ever-changing real estate market in Dubai, it is quite interesting to notice that some things remain stable. Some of the features that affect prices property in Business Bay and other areas of the city always include the remoteness of the metro.
Another thing is that developers prefer to build luxury housing instead of ordinary ones, which makes the market full of offers for those who are ready to spend an indecent amount of money on the property.
Of course, some of the projects may ‘freeze’ for some time, but now we are witnessing a trend of them getting back to the market. So, in this article, we will have a look at the current state of the market and the things that form it.
How Metro Affects Dubai’s Housing
It is no secret that real estate prices are determined not only by the qualities of the property itself but also by its location. The key role is often played by the nearby presence of developed transport infrastructure, shops, hospitals, schools, kindergartens, etc.
A small apartment in the heart of the city within walking distance of everything you might need costs more than a larger apartment outside the city. The same applies to Dubai.
The cost of real estate there is largely determined by the presence of a nearby metro station. A recent study by analyst firm Knight Frank found that from 2010 to the present, residential prices near stations have risen by as much as 58%.
The study covered the period from the 1st quarter of 2010 to the 2nd quarter of 2018. The average increase in prices in the housing segment over this period was 28%. However, properties located within walking distance from the metro showed a much better result.
- Housing, located within a 5-minute walk from the metro, has risen in price by 51% over the period;
- Housing within a 10-minute walk – by 58%;
- Properties within a 15-minute walk – by 33%.
The authors of the report note that the city’s developers are well aware of this trend and are trying to get land plots closer to the metro for construction. No developer is an exception, because most of them try to locate their facilities in the most sought-after areas of the city.
It is interesting to note that right now the value of property in Dubai (not the rate of growth in value) is higher the farther it is from the metro line. Thus, according to Knight Frank, the cost per square meter of housing within a 5-minute walk from the subway is 4% less than the average for the city. A 10-minute walk costs 9% more than the average, and a 15-minute walk costs 32%.
On the other hand, the authors of Knight Frank also point out that the closer the property is to the metro, the higher its rental price.
It turns out the following: the closer to the metro, the cheaper housing, the more it generates rental income, and the faster its value grows.
More luxury real estate in Dubai and even “unfreezing” all long-term construction
Construction in Dubai is gaining new momentum. It turned out that the demand for housing there exceeds the supply so much that even long-started and unfinished construction projects are “thawed out”. The reason is the massive influx of wealthy foreigners to the metropolis on the shores of the Persian Gulf. It is reported by the Financial Times. The reason lies in the growth in demand for housing in connection with a wave of wealthy visitors.
Of the projects that are planned to be “reanimated” in the first place, the following stand out in particular.
- First, the archipelago of artificially created islands of Palm Jebel Ali.
- Secondly, the 73-storey Dubai Pearl Tower.
Housing in the UAE in general and in Dubai in particular is most popular among Asian billionaires and cryptocurrency traders, as well as wealthy Europeans trying to find a safe place. Dubai-based real estate agents say sales to clients in Europe have doubled in the past months of this year compared to the same period in 2021.
“Billionaires and entrepreneurs are flocking to the UAE in record numbers, leading to a surge in property demand. Most buyers are looking for ready-made apartments and real estate on the waterfront,” experts say.
As demand increases, so do prices. Thus, the increase in real estate averaged 10% as of June, while villas added in price even more significantly – all + 19%.
Square meters on the man-made island of Palm Jumeirah have been and remain the constant leader in demand. By the way, the incomplete Palm Jebel Ali is immediately three times larger than it in the area.
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