If home buyers chose apartments over villas due to a price advantage, they need to think again. Villas in Dubai just got cheaper over the last 3.5 years by a whopping 18%.
The Dubai House Price Index that tracks residential sales prices for the same selection of properties reveals that prices of villa/townhouse have declined by 18% in February 2019 when compared to their prices of AED 5.6 million in September 2015.
Of course, that number includes the overall market figures. When one looks at key communities in the city, the percentage of decline varies by neighborhood and is a much lower number.
The top 9 declines occurred in the mature communities such as Discovery Gardens (-12.9%), Arabian Ranches (-12.2%), International City (-11.5%), Jumeirah Islands (-11.3%), Emirates Living (-11.4%), Dubai Land (-11.2%), Dubai Sports City (-10.8%), Dubai Investment Park (-10.7%) and Jumeirah Village Circle (-10.6%).
A more stable set of communities included these 7 neighborhood areas of Dubai that are most popular due to their prime location and conveniences offered: Al Furjan (-9.3%), Downtown Burj Khalifa (-9.2%), Palm Jumeirah (-9%), Dubai Marina (-8.9%), Jumeirah Beach Residence (-8.7%), Business Bay (-7.3%), and Jumeirah Golf Estates (-5.6 %).
What does this mean for home buyers and investors?
The steady decline in prices may be alarming to some but with a world-class infrastructure, Dubai’s real estate will be a hot bed for international property investor community due to its outstanding connectivity to major global cities in the world, for many years to come.
The current decline is due to the rapid increase in construction projects and supply which has surpassed demand, in anticipation of the growth post-Expo 2020.
As the projects complete and gets delivered to home buyers and investors, the market is expected to settle down and stabilize prices. In real estate, once the price hits rock bottom the only place it can expect to go is higher.
With patience, percipient investors will earn their due in the form of rich ROI and rental yields. When buying property in a stable community with a lower rate of decline, it is still a worthy investment for the future.
Home buyers who pick up a villa today will enjoy the benefits of a larger space with independent living, while still retaining a sense of belonging to communities.