As Dubai property prices peak, demand for affordable real estate rises in other emirates – Khaleej Times

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Published: Sun 2 Jun 2024, 5:26 PM

Last updated: Sun 2 Jun 2024, 10:30 PM

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As property prices in Dubai peak, demand for freehold properties in the neighbouring emirates of Abu Dhabi, Ras Al Khaimah and Sharjah is increasing, according to experts.

“Abu Dhabi’s residential market has been relatively subdued when compared to Dubai, with prices remaining stable over the last four years,” Faisal Durrani, partner and head of Research (Mena) at real estate consultancy Knight Frank, told Khaleej Times.

“It is this stability, combined with the fact that prices in Abu Dhabi are, on average, about a third cheaper than Dubai, that has contributed to rising transactional activity.”

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A report by real estate marketplace Property Finder recently noted that Abu Dhabi has seen a huge increase in property transactions. “Official data show an uptick in home ownership in Dubai in 2023 with sales transactions rising 38 per cent from 2022. Similarly, total transactions in Abu Dhabi increased 75 per cent over 2022,” read a whitepaper released by the company.

Investors have started seeking real estate purchasing opportunities in Sharjah, Abu Dhabi and Ras Al Khaimah, according to industry experts.

“For example, property prices in Sharjah are generally lower compared to Dubai, attracting budget-conscious investors. Abu Dhabi has a robust economy with significant investments in infrastructure, culture, and tourism while Ras Al Khaimah is increasingly becoming a tourist destination, which drives demand for real estate, especially in the hospitality sector,” Jeff RK, CEO of Manifest Properties, told Khaleej Times.

Sharjah did not have freehold property options previously. But with units coming to the market, real estate agent Shabna Ibrahim is seeing a “growing” interest. “However, most of it comes from people who want to live in Sharjah.”

Renting to owning

In Abu Dhabi, residential tenants have used the price stability as an opportunity to transition from renting to owning. Homeowners are upgrading where possible, according to Durrani.

“International demand too has crept up, with the proportion of international buyers — not resident in the UAE — for Aldar’s home sales rising from 3 per cent two years ago to 28 per cent last year, highlighting Abu Dhabi’s gradual emergence as a property purchase destination for international investors and buyers.”

He said the prices mostly reflect growing interest but are still cheaper than the emirate’s previous highs.

“Overall, residential values in Abu Dhabi are up 2.6 per cent over the last 12 months,” he said. “The performance of villa prices has mirrored Dubai, with this segment of the residential market experiencing a 10 per cent uplift over the same period. Despite this, capital values for villas trail the 2014 peak by 9.8 per cent, while apartment prices remain 25.6 per cent below the last market peak 10 years ago.”

RAK’s Wynn effect

Ras Al Khaimah’s multi-billion-dollar gaming resort has boosted demand for real estate.

“Central to the emirate’s new vision is the decision to develop the now under construction 1,500-room Wynn Resort and gaming venue,” noted Durrani.

The planned arrival of casino giant Wynn Resorts’ first property in the region in 2027 has already caught the attention of the international wealthy. “About 64 per cent of global HNWI (high-net-worth individual) now view Ras Al Khaimah more favourably as a property investment destination, directly as a result of the Wynn Resort.”

He was citing research from Knight Frank’s 2024 Destination Dubai report, which investigates demand from global HNWI for real estate assets in the UAE.

Jeff said several developers are taking a keen interest in Ras Al Khaimah. “Major developers of Dubai like Emaar, Ellington and others have also launched flagship projects in Ras Al Khaimah,” he said. “The emirate’s natural beauty, including mountains and beaches, adds to its attractiveness as a residential and investment destination.”

The establishment of free economic zones promotes business and attracts foreign investments. The emirate recently announced that it will launch air taxis that will cut the time taken to travel from Al Marjan Island to Jebel Jais to 20 minutes, from the usual 70 minutes by car.

Popular areas

Abu Dhabi has seen a steady rise in demand for community living, according to Kika Pavese, managing director, MD Properties. “Approximately 70 per cent of our clients express a specific interest in such environments, indicating a growing desire for social connectivity and shared amenities,” she said.

Durrani has seen a similar trend. “The most affordable locations, such as Al Raha Gardens and Al Reef Villas have experienced the sharpest gains,” he said. “Since Q1 2020, it is also these two neighbourhoods that have registered the steepest gains, with prices at Al Raha Gardens up 12.1 per cent in the last four years, while villa prices have risen by 18.5 per cent at Al Reef Villas over the same time period.”

According to Jeff, the highest demand in Ras Al Khaimah has been at Marjan Island due to the announcement of the gaming resort. In addition to that, other areas have also seen an uptick in interest.

“Known for its resort-style living, Al Hamra Village has seen substantial growth in property values and rental prices due to its attractive beachfront properties and amenities,” he said. “This waterfront community of Mina Al Arab is also gaining popularity for its luxurious villas and apartments. The area is seeing an increase in both sales and rental prices due to its scenic views and quality of life.”

In Sharjah, communities by Arada and Alef have seen a good amount of interest. “The amenities in Arada are almost comparable to Dubai Hills Estate or Dubai Creek Harbor but the prices per square feet are lower,” said Shabna Ibrahim. “Alef also has very economical prices for a waterfront property.”


Nasreen Abdulla

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