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Dubai real estate: Emerging communities vs. Mature locations

Gain insights from a seasoned expert on where to find the best investment opportunities in Dubai for long-term growth and stability

Dubai real estate: Emerging communities vs. Mature locations

In the first three months of 2024, Dubai’s real estate market showed robust performance with over 36,000 homes sold, making it the second-highest period on record. Property Finder’s Market Watch digest report showed a significant interest in both existing and off-plan properties. Existing projects in Dubai saw nearly 19,600 transactions, accounting for a 54 per cent market share compared to the previous year.

Transaction values in Q1 2024 amounted to $21.3 billion (AED 78.2 billion) contributing to 68 per cent of existing sales transaction value, an increase from 60 per cent in Q1 2023. Consequently, existing/ready transaction value witnessed a substantial rise of 46 per cent compared to Q1 2023. In contrast, there were approximately 16,600 off-plan sales transactions in Q1 2024, a slight increase from 16,000 transactions in Q1 2023.

Hence, the current Dubai market presents ample opportunities for both developers and buyers. And as a seasoned real estate expert, I’m frequently asked about the best investment locations in Dubai’s dynamic property market: Do we go for new up-and-coming communities or mature existing locations? The answer isn’t straightforward, but a closer examination reveals insightful strategies.

The immediate returns are evident when considering mature communities like Dubai Marina or Palm Jumeirah. These areas are nearing their development capacity, ensuring a stable demand due to limited supply, like Emaar’s downtown, which is almost out of land stock. While this minimises the risk of oversupply, investors should note that appreciation rates in these areas may not skyrocket.

Alternatively, investing in emerging communities, such as Tilal Al Ghaf or Jumeirah Golf Estates, presents its own challenges and rewards—the primary concern lies in whether the master developer will fulfil its promise. I advise focusing on communities with unique features, whether a water canal, crystal lagoon, or golf course in a gated community. These characteristics tend to maintain high demand. It’s crucial to select areas with limited plots or units to prevent oversaturation and maintain scarcity. While a vast macro community like Business Bay might not be ideal, a micro-community within it, such as The Peninsula in Business Bay, is the wiser choice.

For large-scale projects like Dubai Islands (formerly Palm Deira and Deira Islands), caution is advised until they are subdivided into smaller, well-defined sub-communities. This approach reduces risk and offers clearer investment choices. The transformation of ‘Dubai Land’ into smaller communities like Mudun and DAMAC Hills is a prime example of this strategy, where clarity and safety in investment choices improved significantly.

Ultimately, I recommend seeking distinct, well-planned communities within larger developments, such as District 1 or Ketura within the larger Meydan development, for a more focused and potentially lucrative investment in Dubai’s real estate landscape. Buying a single unit in a standalone building and betting on other private developers to start their projects is an easily mitigated risk.