Up-and-coming investment areas

Different locations in Dubai are taking advantage of infrastructure, retail and tourism projectsImage Credit: Supplied

Whether it’s a firsttime buyer or a seasoned investor, the astute property buyer will look for areas that have it all: an attractive built environment, solid infrastructure, reliable transport links and a likely return on investment.

Some investors try to identify up-and-coming property locations, i.e. districts where they can get in early at a reasonable price, in the expectation of enjoying future gains above normal market performance.

What criteria do buyers look for when searching for such up-and-coming locations? Some follow new transport links as property price rises often follow new transport routes. Others identify underpriced areas that are adjacent to more expensive districts and considered well-placed for a future price rise, while others look to new developments that offer quality build with the likelihood of valuation gains after some maturity.

Just over a decade ago, Dubai Marina, The Gardens and Arabian Ranches were considered remote locations as Dubai was centred around Deira and Bur Dubai. However, intervening years have seen massive  infrastructural delivery, adding new highways, bridges and intersections as well as a new airport and the Dubai Metro and tram networks. Dubai has since been able to expand southwards towards Abu Dhabi along Shaikh Zayed Road as well eastwards towards Mohammad Bin Zayed Road and Emirates Road.

These improvements have opened up previously outlying lands to create new development zones which are now well-connected. There has been an estimated 14 real estate projects launched so far this year in Dubai, with scheduled completion dates up until the World Expo 2020. Some of these developments are located in established neighbourhoods, while others are being developed in newer, more outlying locations. Certainly some investors in these new locations are looking to benefit from lower off-plan prices and attractive payment plans in the hope that values will rise after completion and handover.

What about the established areas of Dubai? Our research found that some locations are expected to take advantage of new infrastructure, retail, tourism and leisure developments by 2020 and beyond.

Dubai Sports City, Jumeirah Village and Dubai Production City (IMPZ) have started to benefit from a major retail mall opening, the first phase of Al Futtaim’s City Centre Me’aisem. Since the mall opened in  September last year, surrounding areas began to enjoy improved capital and lease values and stronger rental absorption rates, as a result of improved local retail facilities. Al Khail Avenue mall in Jumeirah Village is also expected to benefit the area once completed.

Within four years, Discovery Gardens and Al Furjan are expected to benefit from the announced Metro 2020 expansion. When completed, this could potentially add a price premium of up to 15 per cent for apartments in buildings within 5-10 minutes walk to the Metro.

Moving towards the coast, we find the well-established Jumeirah Beach Residence (JBR) is now further enhanced with the opening of both the Dubai Tram and The Beach commercial development by Meraas. Additionally, work is under way on the nearby Blue Water project, a new mixed-use man-made island development that will hold the world’s largest Ferris wheel, similar to the London Eye, only larger. This attraction is aimed at becoming a significant magnet for tourists and residents alike.

These improvements could all translate into a potential uplift in capital and rental values in the area, with a possible ripple effect  beyond JBR and towards neighbouring Dubai Marina. The Palm Jumeirah is also expected to benefit from a new mall and waterfront attraction, the 136,000-sq-m The Pointe.

Business Bay, close to Downtown Dubai and Dubai International Financial Centre, is going through a major transformation. The Dubai Water Canal extension roadwork, which is 80 per cent complete, will soon link the existing Business Bay Creek towards the sea, transforming the area from a businesscentric location to a major maritime-style development similar to Dubai Marina, encouraging new waterfront retail development. Once the project is completed, apartment units could expect a boost in capital values as well as rents, particularly more secondary type units that are not within walking distance of Downtown Dubai or don’t already enjoy views of the Burj Khalifa. This is in addition to the considerable uplift that Business Bay has enjoyed since 2012, much as a result of the exceptional market dynamics in adjoining Downtown Dubai, which incidentally expects strong capital growth within 3-4 years once the Dubai Opera opens its doors and the Dubai Mall further expands, not to mention several premium Emaar projects due to complete soon.

The 2016 ValuStrat Price Index (VPI) for the second quarter displayed a 1.1 per cent annual decline in values. However, the monthly growth rate of residential values has been stable since July last year. Statistical analysis has shown further indications of an early recovery in some areas, signalling possible signs of property values bottoming out across locations covered by the VPI during the course of the year. Going forward, in a calmer property market, investors may find that research is key in identifying newup-and-coming locations that could provide future returns and opportunities for successful investment.

Source: Haider Tuaima, Special to PW


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