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Dubai villas outperforming apartments

Catherine Deshayes

Villas in Dubai have grown in value twice as much as apartments, but the latter still continue to offer the best rental yields, says a Bahrain based investment bank...

Dubai is the fastest growing city on earth. Its dash for growth whilst the oil supply was booming has become the stuff of legend, and it just keeps on growing.

Cranes building new developments almost outnumber the existing skyscrapers and property prices have sky rocketed over the last few years.

This new report from Bahrain-based investment bank SICO shows that villas have grown massively in value whilst apartments, which have increased in value, have risen at a far slower rate.

The SICO report is attributing the upward trend in villa prices to the short supply and large numbers of bankers, lawyers, stock brokers and other finance workers moving to Dubai are pushing up demand.

The report states, "This is a reflection of the preference for expatriate families to live in a villa rather than an apartment, with a garden, parking and independent access.

"Then there is the simple fact that about ten times more apartments have been built than villas since 2002, so villas have both a scarcity value as well as being perceived as the better lifestyle choice."

Dan Johnson, Director of TheMoveChannel.com, said, "Although located in the Middle-East, Dubai has the feel of a western city with tax benefits.

"A wonderful climate and a booming business background make this miracle in the desert, an investor's dream," added Mr Johnson.

The report's figures show that since 2002 villas have appreciated in value by twice as much as apartments while rental yields presently stand at around five per cent for villas and eight to 8.5 per cent for studios and one-bedroom apartments.

Arabian Business has revealed that rental costs for two and three-bed apartments on the Palm Jumeirah, one of three artificial palm-shaped islands in the Emirate, have risen by 37.5 per cent and 33 per cent. Since March, the cost of renting a villa has increased by 20 per cent.

Celeb watch

Celebrities are getting in on the Dubai act, keen not to miss out on the ever expanding market.

Brad Pitt is assisting in the design of an environmentally friendly five-star resort in conjunction with a Los Angeles architecture company.

Along with his wife Angelina Jolie, Pitt is also rumoured to have bought into a luxury island development, just off the coastline of Dubai, called ‘The World.'

Sporting legends Tiger Woods, Boris Becker and Greg Norman, fashion guru Giorgio Armani and entrepreneur Richard Branson have also bought into or endorsed developments in Dubai.

Browse Dubai properties for sale.

Picture by susush