More than 500 people queued to buy 2,000 villas in the new Jumeirah Park development this week, and 900 were sold by developer Nakheel in one day. This is a far better response than for some recent off-plan apartment launches, so have the buyers got it right? Are villas a better buy in Dubai than apartments?
The scenes in Dubai this week were reminiscent of the early days of the local housing market when 700 queued to buy what became Meadows 9 in the summer of 2003. At that time people pushed and shoved to get into the Godolphin Ballrooom at the Jumeirah Emirates Towers Hotel to sign up for off-plan villas.
Those buying in Jumeirah Park will be hoping for a similar success to that of Meadows 9 where rents have doubled and villa values have almost trebled. And the Jumeirah Park is actually situated in a 370-hectare, horseshoe shaped piece of land surrounding the popular Meadows, Springs and Jumeirah Lakes district. The first two of these developments was by Emaar and the last from Nakheel.
Financing terms have improved in the past three years. The original Meadows 9 buyers could only borrow from Amlak Finance, then part of Emaar, with loans of up to 80%. This week's buyers could avail up to 96% from Amlak, Barclays, HSBC and Tamweel.
The crucial difference for investors buying villas instead of apartments is that far fewer villas are under construction in Dubai than apartments, and it is the villas that many expatriates prefer to rent.
Villas also sit on a lot of land – which has a value unlike apartments that are part of a common hold block. Another linked point is that in most property markets of the world villas are valued more highly than apartments, while in Dubai villas have sold at a discount to luxury apartments and this is a relationship that should reverse with time.
It does not appear a wild assumption that in a city with 216 towers under construction - on one recent estimate - and many tens of thousands of apartments due to be completed over the next few years, that villas will remain in short supply. Indeed, the supply of villas will get smaller as a proportion of the mushrooming apartment numbers.
Villas in short supply
Hence, from a simple analysis of future supply and demand a villa in Dubai looks a better buy than an apartment, at least at the luxury end of the market.
Of course when you buy off-plan as the Jumeirah Park buyers did this week you are taking development risk, such as quality of finish and the delivery date in 2009. But the chances of being left with an un-let property look remote, and the chance of a capital gain is surely better than in the apartment market which may be looking a little oversupplied by that time.
In addition, for those buyers more interested in somewhere to live than a quick profit, the location of villas like the Jumeirah Park is likely to prove very attractive with the same close proximity to 'New Dubai' as the successful Meadows, Springs and Jumeirah Lakes projects.