ROI on Dubai villas strong: Bayut.com Jan 2018 Market Report

Bayut.com, the UAE’s leading data-driven property portal has come out with their monthly real estate report with insights on the latest trends in the industry. January’s report looks closely at what impact the introduction of VAT has had on the city’s real estate projects and how rental trends have changed since 2017.

Here are the key highlights:

  • The top 5 areas to rent apartments in Dubai remained stable: Dubai Marina, Discovery Gardens, International City, Dubai Silicon Oasis and Jumeirah Lake Towers.
  • Mirdif is the most popular for villa rentals
  • Dubai Marina takes the top spot for buying apartments
  • Arabian Ranches is the most sought-after neighbourhood for buying villas
  • ROI for buying apartments in Dubai down to 6.54% from 6.82% in 2017.
  • ROI for villas has gone up to 5.27 %, from 5.04% in 2017.

Dubai Marina retained the top spot for apartment rentals with average rents of AED 65k for studios, AED 88k for 1 bedroom apartments and AED 130k for 2 bedrooms. The next spot went to Discovery Gardens’ where average rents for a studio was AED 43k, 1 bedroom apartments were at AED 60k, and 2 bedrooms were at AED 87k. Coming in third is Dubai Silicon Oasis were asking rents were marginally lesser than Discovery Gardens. The most affordable of the top 5 was predictably International City.

For Villa rentals, Mirdif was the most popular, with asking rents falling on average. Asking rent for 3 bedroom villas was at AED 115k, 4-beds were at AED 130k and 5-beds at AED 150k. Other popular areas to rent villas in Dubai during January were The Springs, Jumeirah, Al Barsha and Umm Suqeim. Most of these areas saw a slight decline in rent, except Umm Suqeim where rents went up slightly.

Buyers market for the emirate was being closely monitored because of the introduction of VAT, but saw stable results so far into 2018. The popular areas for buying apartments were Dubai Marina, Downtown Dubai, Jumeirah Village Circle (JVC), Jumeirah Lake Towers (JLT) and Palm Jumeirah.

Average costs for buying apartments went down slightly in the first month of 2018. Dubai Marina was the firm favourite with average asking prices for studios at AED 837k, 1 bedroom apartments at AED 1.3M and 2-beds at 2.2M. Downtown came in second with considerably higher prices. Studios here were selling for AED 1.2M, 1-beds for AED 1.5M and 2-beds AED 2.8M. JVC remained popular for investors thanks to the competent price tags on apartments. Studios here were at AED 460k, 1 bedroom apartments at AED 750k and 2 bedrooms apartments were at AED 1.1M.

The next sought-after investor location, JLT remained stable across all three units. The most expensive area for buying apartments was predictably the more upscale Palm Jumeirah with studios at an average of AED 1.19M, 1-beds at AED 2.2M and 2-beds at AED 2.7M.

With both asking rents and sale prices decreasing on apartments, the ROI on buying apartments in Dubai has dipped slightly to 6.54% from 6.82% in 2017.

Villas on sale in Dubai stayed in line with the overall trend with asking prices going down marginally. Arabian Ranches continued to be the investor favourite, with asking prices in this neighbourhood for 3-bed properties at AED 3.1M, 4-beds at AED 4.25M and 5-beds at AED 5.45M. The other popular villa communities for buyers were Dubailand, Palm Jumeirah and The Springs.

Although asking prices on average went down for villas, the ROI has gone up slightly to 5.27%, from 5.04% in 2017 because of continued interest in renting.

It’s still early to comment if this trend will continue through the year. Bayut.com is keeping a close track on the market to give more insights into how things will shape up in the coming months. While many people expected a dramatic change with the introduction of VAT, it is still too early to see the real effects. Of the new projects launched after 1 January, none have actually passed VAT on to buyers in a tangible way. As we get through the year, we may be able to see a more concrete impact, but as things stand the real estate market in Dubai appears to be making a smooth transition into 2018.

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