Dubai is currently experiencing its third major real estate cycle.
Backed by one of the world’s strongest economies and more transparency and maturity, experts predict this cycle will be more sustained and reminiscent of other property prime property markets such as London.
So far, this current growth curve is outperforming all other global markets. Property prices increased by 10.6% in Dubai in 2021 and rose by a further 5-6% last year. This is the strongest growth in nearly a decade and as other global markets undergo a period of contraction, investor demand for Dubai real estate may only increase in the coming years.
Where should you invest in Dubai in 2023 & 2024?
Dubai is a real estate market with 3.5 million residents and at least a dozen diverse areas, each with its own combination of advantages and disadvantages from an investment standpoint.
We’ll highlight a few of them below, but please contact us if you have any questions about the investment prospects of any neighbourhood in Dubai.
What makes a good investment location in Dubai?
Any list of the best neighbourhoods to buy property in Dubai will include major markets such as Downtown and Business Bay.
These locations have now stood the test of time and produced years of consistent returns for investors. However, the Dubai market is one that is always fluctuating and fast-paced. Consequently, investors can’t buy on reputation alone and should always take time to familiarise themselves with some of the more fundamental supply and demand dynamics in each submarket.
Because these markets are more mature, you’ll discover a greater selection of properties to fit different likes and budgets, as well as more possible purchasers if you decide to sell.
However, as many of the major investment locations in Dubai are driven and backed by large-scale government investment and major infrastructure initiatives, new investment opportunities emerge and existing market dynamics shift. Some of the largest returns on investment in Dubai property have occurred as a result of investors recognising an early opportunity
- Annual capital growth: 11%
- Annual yield: 7.4%
- Average property price: 1,660 AED per sq ft
- 5,500 transactions in 2022
- Total value of transactions in 2022: 18 bn AED
For over 20 years now, Dubai Marina has been one of the emirate’s top-performing property markets. Investors and owners have consistently recorded double-digit capital appreciation. One of the more attractive elements of Dubai Marina investment is that these capital returns are also combined with strong yields driven by a large supply of young professional ex-pats seeking somewhere to let.
Over the past 12 months, there have been over 5,000 apartment sales across Dubai Marina. That’s an increase in demand of roughly a third and has resulted in asking prices rising around 11%.
Annual rents in the marina continue to rise. There are now in excess of 55,000 people living there with many more aspiring to relocate there. The vast majority of Dubai Marina residents rent. Consequently, annual yields sit at around the 7.5% mark currently. This highlights the marina as one of the top places to invest for a rental yield.
Investors looking to acquire new assets in Dubai Marina tend to focus on apartments, with 1 and 2-bed properties driving the best yields. Some of the larger properties in Dubai marina – the 4, 5 and 6-bed penthouses or scattered villas are currently less sought after. That said, considering they have experienced a very slow past 12 months in which some larger properties have actually lost value, they may now represent great value for longer-term investments.
- Annual capital growth: 6%
- Annual yield: 6.8%
- Average property price: 2,200 AED per sq ft
- 4,000 transactions in 2022
- Total value of transactions in 2022: AED 13 bn AED
Downtown Dubai is a great example of what can be achieved via visionary master-planned real estate investment.
The location was designed to be a real estate investment hotspot and it has been successful – almost every year since it was renamed from Umm Al Tarif in 2000, Downtown Dubai has been the focus of UAE’s prime real estate market.
The area, famous as home to the world’s tallest building, the Burj Khalifa, also has some of the most expensive assets in Dubai. On average, real estate in Downtown Dubai recorded almost 7% capital growth over the past year. However, investors holding larger assets – particularly 3-bed apartments – have seen values increase at double the average rate.
When considering overall return, investors should note that Downtown does offer a considerable lettings opportunity. Although a smaller rental market than Dubai Marina, tenant competition can be fierce, this, combined with the fact that Downtown properties also provide some short-term tourism lettings potential, has seen average annual yields grow to be some of the strongest in Dubai in recent years.
Investors should also note that Downtown is a fast-paced market, and apartments and villas are acquired at a slightly quicker pace than in many other areas in Dubai.
- Annual capital growth: 9.5%
- Annual yield: 6.1%
- Average property price: 1,600 AED per sq ft
- 6,500 transactions in 2022
- Total value of transactions in 2022: 10.5 bn AED
Business Bay continues to be a top property investment location in Dubai. The master-planned, mixed-use location – that is as residential as it is commercial – straddles both banks of the 3.7 bn AED Dubai Water Canal and has a very strategic location next to Downtown.
Investors have enjoyed some of Dubai’s strongest ROIs here over the past few years, and despite asking prices and transaction values rising, more than 6,000 properties were acquired by investors over the course of last year.
Even in light of the consistent growth, prices in Business Bay still remain very appealing to investors, particularly in comparison to nearby Downtown. Investors acquiring property in Business Bay more recently do so in the firm belief that the area will only grow in the coming years. That belief is driven by government policy outlined in the recent Dubai 2040 Master Urban Plan which firmly positions Business Bay as the focus of the emirate’s financial sector. Current forecasts predict the population of Business Bay will rise to 190,000 people.
Business Bay was once named as one of the world’s coolest neighbourhoods and already offers residents a very distinct and charming waterside lifestyle. Few mixed-used masterplans across the world have managed to blend work and play in a more successful manner.
In 2023, investors will find the Business Bay market to be predominantly completed properties. Although with over 20,000 new properties in the pipeline, there is a substantial opportunity to acquire off-plan.
- Annual capital growth: 13.4%
- Annual yield: 4%
- Average property price: 1,800 AED per sq ft
- 2,000 transactions in 2022
- Total value of transactions in 2022: 18 bn AED
For the past 2 years, Palm Jumeirah has been the top investment location in the whole of Dubai. Many experts argue that it has been the top investment location in the world.
The driving force behind the Palm’s rise has been its villa market. Historically an exclusive and luxurious place to buy and live, the Palm became the go-to location for the world’s high-net-worth individuals during the pandemic. Given the restricted supply of property on the man-made archipelago, sellers could name their price. Asking prices soared and transaction values mirrored them. Investors saw almost 50% annual growth in the value of some properties.
Now, a few years after global lockdowns, the average villa price on The Palm is in the region of US $5 million and capital values are appreciating at a much more logical, but still lucrative, 13-14%.
From a lettings perspective, even though rents in the Palm are very high, yields are low – unsurprising given the huge capital outlays of recent times.
However, due to Palm Jumeirah’s enduring popularity with tourists, investors willing to lease on the short-term lettings market can make substantially more than the Palm’s average yield of 4%.
Jumeirah Village Circle
- Annual capital growth: 18%
- Annual yield: 7%
- Average property price: 1,000 AED per sq ft
- 4,000 transactions in 2022
- Total value of transactions in 2022: 4 bn AED
The Jumeirah Village Circle market has enjoyed a stellar performance over the past few years.
It is one of Dubai’s more mature real estate locations and for many years has been considered a steady-performing investment location. However, many investors have noted some recent changes in market dynamics and it has resulted in some strong growth and the prospect of more.
Firstly, the Village Circle has experienced a mini Palm effect, which saw thousands of new residents look to move to a location with more space (and less outlay than the Palm) following the pandemic.
Secondly, Jumeirah Village Circle and its surrounding area has undergone some substantial infrastructural improvements, including public transport upgrades and the development of new schools and educational institutions.
Jumeirah Village Circle has always been strategically located, sitting on the west coast of Dubai offering short commutes to major commercial hubs such as Downtown and Dubai Marina.
Investment locations: Emerging markets in Dubai
More experienced investors or those with slightly different portfolio needs are also currently diversifying to a growing number of select emerging locations across the emirate.
Emerging investment locations offer a few advantages, namely lower asking prices and the potential to lock-in value ahead of an area’s first major growth curve.
Obviously, the drawback with these markets is the risk is higher, it may be harder to let the property for the first few years or lower demand from other investors may make an exit harder, which in turns curtails some of the capital gains.
However, from a mid to long-term investment perspective, Dubai also offers investors many newer options.
Some of these locations are:
- Dubai South
- Emaar Beachfront
- Dubai Water Canal