The growth in terms of prices of the luxury beachfront properties in Dubai has been remarkable compared to the rest of the residential properties in Dubai. According to the latest reports available in the industry, it has been noted that the prices of luxury villas in the coastal areas have risen by more than 140%. In addition to this, it has also been noted that the scarcity of land has led to an increase in the prices of these luxury villas to even higher levels.
According to the executives of the real estate industry, it has been noted that the prices of these luxury beachfront properties in certain areas of Dubai are sold for a price that is 60% higher than the price of similar kinds of luxury properties that are not located on the beachfront. In such a market, the purchase of waterfront land in Dubai for investment purposes has gained much attention due to the perception of the rarity of the asset.
Among the different areas, Palm Jumeirah has shown outstanding results during the past five years. As Farooq Syed, CEO of Springfield Properties, stated, “In Palm Jumeirah, luxury beachfront villas have seen a growth of over 140%.” This outstanding growth of Palm Jumeirah’s real estate market proves that it is one of the most valuable areas of Dubai’s luxury housing market.
What are the forces that drive the growth of the luxury market in Palm Jumeirah?
Apart from Palm Jumeirah, other locations such as Dubai Marina, Jumeirah Beach Residence (JBR), and Emaar Beachfront have also performed exceptionally well.
Beachfront properties in developed areas like Palm Jumeirah can range from 30% to 60% more in price compared to properties in the same area without direct beachfront access. However, the primary factors affecting these variations in price are:
Unlike other areas like the inland districts, which can accommodate more construction and expansion, beachfront properties in Dubai are limited in their natural availability, which leads to their appreciation in the future.
One of the most significant shifts that have occurred in the market in recent years is the increase in the proportion of end-users and long-term residents in the market for prime beachfront properties. Some of the most significant characteristics of this shift in the market are:
This shift in the market has resulted in a decrease in the turnover of this segment and has thus ensured that the price is maintained.
The influx of millionaires and rich families into Dubai has also contributed significantly to the demand for beachfront villas. Many people are seeking:
All these are satisfied in a luxury living situation on the coast.
On the income side, the performance of beachfront properties is still good. The gross rental yields of prime beachfront villas and apartments are said to be between 5% and 8%. This is a high rental yield and is supported by long-term rentals and lifestyle occupation.
Whereas a large number of new schemes is being erected in Dubai, the largest share of the new supply is being developed in the inland areas, i.e., Dubai South. Hence:
The prices of luxury beachfront villas in Dubai have seen a surge of over 140% in the last five years. The Palm Jumeirah is leading the surge. The limitation of land, the emergence of end-users, the emergence of international investors, and the appeal of beach living are the factors responsible for the surge in prices of beachfront villas.
With the emergence of new supply in the market, which is not located on the coast, prime beachfront property is likely to remain scarce with its 30-60% price differential from inland property. The beachfront sector of the Dubai property market is likely to continue as one of the strongest and most profitable sectors, depending on the level of high-net-worth investors.
Source: https://www.khaleejtimes.com
