Villas and Townhouses

What just happened here? There are two kinds of UAE residents. Those who bought a villa or townhouse in 2020 or 2021 and those who have friends who constantly tell them about their great investment. The first group made millions and the second group, well, … I’m part of the second group.

The last five years have been phenomenal for anyone owning a house or villa in Dubai.

Price increases after the pandemic even topped the ones after the Global Financial Crisis of 2009. Per sqft prices of villas and townhouses as recorded by Dubai Land Department on average increased by triple digit percentages since 2020 across all major areas, with the exception of Emirates Hills. Even if you bought in 2014, your investment would likely still have increased substantially.

Note: The average increase in per sqft rates on transactions doesn’t mean each property increased by that much. The mix of houses and villas transacted in 2009, 2014, 2020 and 2025 might be different. However it is an approximation that is likely not too far off.

How did this happen and can we still get in?

Prices increased across all areas. Now let’s have a closer look at the reasons and see what conclusions we can draw.

1. The situation in 2020 - the perfect storm

Even before the pandemic, Dubai’s economy was struggling. After the introduction of VAT in 2018, many retail businesses had to close. People lost their jobs and left the UAE. The pandemic then was an extreme situation. Companies had to close. More people lost their jobs. More left Dubai. The economy was weak. Demand was low. Everyone was worried about their employment. Most didn’t expect Dubai to recover so quickly.

2. Dubai’s stellar recovery

Dubai recovered much faster than expected. It was able to open up faster than most countries. One of the reasons was the early availability of COVID 19 vaccines. This lead to very high immunization levels across the UAE long before many other countries. Already in July 2020 Dubai started welcoming tourists again. Business gradually improved. Jobs became more secure. People came back.

3. Post pandemic growth

Remote working models used during the pandemic became a part of life. Companies and employees understood that not every task has to be performed in the office. This led to the concept of the Digital Nomad. If I can do my work from anywhere, then why not choose a nice location by the beach, in a city with great infrastructure, no street crime and best of all - NO INCOME TAX? Dubai has also been experiencing an influx of rich people, most likely for similar reasons. In 2024 alone 6,700 millionaires were expected to move in. A lot of those digital nomads and millionaires like to live in houses or villas.

More and more expats also started seeing Dubai as a permanent place to live and started to want more space for their families. All this led to increased demand for villas and townhouses. Estimates are that there is a supply gap of approximately 10,000 houses.

4. Dubai’s 2040 Urban Masterplan

Dubai is on a growth path. Its leadership aims for a population of 5.8 million by 2040. By that time most of the area between the sea and Emirates Road E611 will be used either for parks and green spaces or for developments. Previously, we have often seen Dubai as a city that has a lot of room to grow. There was a lot of land available on all sides. With the 2040 urban masterplan, it became evident that land is becoming scarce. Villas and houses need a lot more land than high rise buildings. One can easily fit a 50 story building with 250 apartments on a 20,000 square feet plot. The same plot can only accommodate a handful of independent townhouses or a single ultra-luxury villa. This is the main reason why prices of villas and townhouses shot up. In prime locations there is no space for further houses. So, community developments move further and further inland.

What conclusions do we draw from this?

The fundamentals for villas and townhouses in all areas of Dubai are strong. Dubai is transforming itself. Land is becoming scarce. In the short term, there could be corrections, especially in areas where prices went through the roof. If and when such corrections come is difficult to predict. However, if Dubai continues on its growth path, prices will continue to rise in the long term. That’s just a basic function of the limited availability of land and the increasing number of people who can afford buying a house.

Traditional prime locations are the safest bet

Prime locations such as Palm Jumeirah, Meadows, Springs, Emirates Hills, etc. will always be a safe bet. The lack of available land in and around those areas means prices can only go up when the city grows.

With this, the times when mid-level executives could live in a 4,000 sqft house in a prime location might soon come to an end. If you live in London or Paris, you also would not be able to afford living in a huge house with large garden close to the city center, unless you are a highly paid senior investment banker, successful entrepreneur, or C-suit executive.

I also find that the villas and townhouses in Dubai Islands still offer great value. Prices have increased since the launch. However, at the point of writing this, they are still quite reasonably priced for a seafront location.

Growth areas still have room to appreciate

Demand for villas in Dubai South will continue to increase, especially as the area becomes more developed. Of course, we need to consider what part of this growth potential is already priced in and how much upside there is still possible. Some of the apartment buildings in Dubai South are sold at similar per sqft rates as luxury apartments in developed areas close to the sea. This makes me wonder what could possibly justify further appreciation. However, most villas and townhouses in Dubai South Residential District, although having experienced stellar appreciation, are still priced substantially below what you pay in Springs or Meadows for older houses that are also not very close to the sea.

Villas and townhouse developments in areas bordering Dubai South could also have great potential, especially those with good facilities and close to a metro station.

Some areas further out might be overhyped

Those areas substantially beyond E611 that have also experienced massive price increases could be more susceptible to corrections. Currently many of those developments are advertised for short driving times to central locations. This is true for as long as the areas in between are uninhabited desert. However possibly not anymore once those areas are developed and traffic increases. Like in other global cities, the outskirts will always be priced substantially below the city, unless they develop themselves into centers. For Dubai South, I can see this happening due to Dubai Government’s very concrete plans for Al Maktoum Airport and District 2020 to create 500,000 jobs and increase the population to 1 million. But for other areas this is less certain.

A word to potential investors

If you are looking to buy a villa or townhouse to live in, you should, besides affordability and level of luxury, consider the below factors:

• Location - how far is the property from the paces you and your family regularly need to go to? How far is it from your and your spouse’s work places, schools of the kids and wherever else you frequently need to be? Driving time is hereby more relevant than physical distance. The distance calculator on our website can help you see the distance and driving time between your places of interest and the developments you consider.

• Facilities - does the community have all the facilities you require, such as restaurants, healthcare, shopping and recreational facilities?

• Quality of construction and maintenance - this will majorly affect the resale value once you plan to leave the UAE or the long-term maintenance/renovation cost in case you stay.

If you are an investor, the same factors are relevant, as you need to either find a tenant or buyer who considers them. However, you also need to think how the area will develop in the future and whether there is still any appreciation likely. Most of the new developments will benefit from Dubai’s continued growth. But you need to assess how much the property will be worth once these developments (and potentially traffic issues) are reality and how much of this is already considered in the price you pay.

Keep in mind that rental yields on villas are in general lower compared to apartments. A 2m apartment can easily fetch 7% rental return. Renting a 7m villa at close to 500k is a lot more difficult. Also, while market rents might appreciate over time, it can be difficult to benefit from it. Villas are often rented by families that will stay for many years and RERA’s rental restrictions make it difficult to increase rent unless the difference to the market rate is very substantial.

Selling to end users who compare their mortgage EMI to the rent they would otherwise pay can be a more profitable strategy.

We have moved the list of recent projects to the end of the email, as it is a bit longer than what we had in previous newsletters. However, as always, you can see the projects on our website by pressing the below buttons.

Many of those communities are already sold out or have only a few units available. If you want to secure a good unit, you need to be quick or accept paying a premium in the secondary market. At the launch date the best units are often sold out. If you want to select the unit you like, you need to submit an Expression of Interest to the developer before the launch date together with a refundable deposit.

Below is a list of projects that are just launched or about to be launched:

In order to get informed in time, we offer members a WhatsApp alert service letting them know when new projects get launched.

In case you would like to know more, we can put you in touch with a specialist who can advise on specific opportunities.

Don’t worry, by clicking this button you will not get unwanted calls from pushy agents. The agents we work with are independent from us, go through a stringent continuous selection process and will only contact you in the way and at the time you choose.

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Feel free to share your feedback on this article or on topics you would like us to cover by replying to this email.

In case you have missed any of our previous issues:

Dubai islands: One of the hottest seafront opportunities

Dubai South: Dubai strongest growth engine

Below you can also download our eBook explaining what drives the Dubai Property Market.

Below is a more comprehensive list of recently launched townhouse and villa developments. Most of these projects are sold out from the developer. However, units can be bought in the secondary market for a premium. I you are interested in buying a unit in the secondary market, we are of course also happy to put you in touch with a specialist:

That’s it for today.

Stay tuned and see you next week.

M&M

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