BackAli Sajwani, the Managing Director of Operations and Technology for DAMAC Properties, recently spoke to Arabian Business about what makes beachfront and waterfront properties in Dubai so attractive for investors.
Below is the opinion piece that appeared in Arabian Business, citing data from high-end Dubai brokerage LuxuryProperty.com. The piece has been edited by The Newsroom.
Why invest in a luxury beachfront property in Dubai? The simple answer - location.
While many buyers would consider various factors when purchasing a home - design, amenities, unique features - it ultimately comes down to location. And there is perhaps no location more desirable, both in terms of the lifestyle it offers and the property value - than a property by the water.
Whether it is the beaches of Miami or the coastline of Jumeirah, anyone who has visited these areas will have considered buying a home there. Beachfront properties in well-established areas certainly rank high on the scale of profitable, safe, long-term investments.
In a world of myriad investment possibilities, property is widely considered a safe bet – a property in a rare or limited location, even more so.
Beachfront properties have a built-in sense of scarcity - after all, there are only a set number of properties that can be built along the shoreline. Plus there are regulations around development for beachfront communities, which creates limited opportunities - and that scarcity invites demand.
For investors, this creates a lucrative option to consider, especially when you factor in the potential to do long-term and short-term rentals. A beachfront property is an excellent investment with guaranteed returns.
However, rental income is just one aspect of what makes a beachfront property so attractive.
According to a market report for Q4 2022 released by LuxuryProperty.com, real estate values in coastal areas have increased faster than the overall Dubai property market, yet waterfront properties only account for 17% of the total supply. Oceanside and waterfront properties account for just 17 percent of all supply. And where demand outstrips supply, we know prices are going to be high.
It might cost you a hefty sum to own an exclusive beachfront property, but it’s a safe bet that your investment will grow in value over time. You also want to look at the lifestyle that this property has to offer - amenities available in the building (if it’s an apartment complex) and surrounding facilities such as retail, dining and leisure spots.
However, a property won’t necessarily go up in value all on its own. You will need to put in some costs to really build value. There might be some maintenance involved, or interior renovations. A well-maintained and upgraded property will have a higher resale value, after all.
To further shore up your investment – pun intended – carefully consider the property’s facilities, fixtures and fittings. Will it need upgrading to achieve above average market rent, if you are thinking of renting? Does it have ample parking, a pool, and enough light and air to fully embrace coastal living?
You might look specifically for a property with generous space surrounding the property, especially if you are looking at short-term or holiday rentals. High-quality facilities like an infinity pool, fitness centre and sporting venues can also help with achieving higher rents.
A recent report suggests that in Dubai, average mainland property value has increased by some 33.9% between Q1 2020 and Q4 2022. That may seem impressive on its own, but consider the fact that in the same report, the average value of waterfront properties is cited as increasing by over 65% during that period.
The report says that seafront homes are also able to command higher prices - a premium of up to 106% over inland properties.
Developers across Dubai are eager to meet this demand, according to LuxuryProperty.com, with data showing that 4,668 new beachfront units were handed over in 2022 and a further 5,829 units are expected to be handed over in 2023. However, demand will continue to overtake supply for the foreseeable future, which will only add to property values.