A recent survey pointed to rising villa prices and falling apartment prices in the first-half of 2005. Will this trend continue into the autumn in Dubai?
Asked for a recommendation for the hottest Dubai property this autumn and one agent immediately answered 'Jumeirah Islands', the much-delayed Nakheel executive villas surrounded by lakes opposite the Dubai Marina district.
This is a new trend: agents are beginning to recommend buying villas and not apartments in Dubai. Why?
One reason is that villas represent better value for money in terms of space per square foot. High-rise is more expensive to build than low-rise, so you get less space for your dirham in an apartment. Thus villas are cheaper than apartments, and also come with gardens which many expatriates seem to like.
Another issue is supply. On some estimates there are around 80,000 units under construction in Dubai, of which perhaps 15,000 are villas and 65,000 apartments. Clearly villas in the best locations are going to be scarcer than apartments, and that scarcity should mean higher prices.
Then there is demand. The Dubai expatriate community has a marked preference for living in villas: hence the popularity of Jumeirah, which is the prime expatriate area and principally a district of low-rise villas.
This market preference was also apparent from the early days of Dubai property launches. Emaar Properties found that it had huge demand for the few villas on its first phase of the Dubai Marina, even when the apartments were harder to sell.
There is nothing new under the sun, and that also goes for the sun of Dubai which comes guaranteed with every villa and apartment.
However, Dubai is moving away from its debut on the international property scene which came three years ago with the launch of freehold sales. There is a great deal more choice now available in the marketplace, and that means factors such as 'location, location, location' apply more than ever.
Buyers that are actually going to live in a property, as opposed to merely speculate on its rising value, are going to go back to basics. What do they really want in a home? Or in the context of house price analysis: what are people prepared to pay most for?
Real estate developers probably now need to spend more time on market research before launching new schemes. How much demand is there for high-rise luxury towers? Do people actually prefer to live in villas?
In any case the marketplace will decide, and this autumn it is going to be interesting to watch which sector attracts the buyers: villas or apartments?