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Dubai real estate: Should you invest in a villa, townhouse or apartment in 2024? Experts weigh in

Experts say that while Dubai villas and townhouses saw strong demand during the pandemic due to more space needs, apartments may now offer better investment opportunities and potential for price gains in 2024 due to their relative affordability and continuing high demand.

Dubai’s real estate sector is evolving rapidly, with new developments expanding to new areas. As a result, investors now face important choices about where and what type of property offers the best opportunities.

Villas, townhouses and apartments all have different features that may appeal more or less depending on the goals and priorities of buyers.

Experts are weighing in on the pros and cons of these options, offering their understanding of where strengthened or weaker potential could lie in 2024.

Dubai sees a ‘surge’ in demand for villas and townhouses, but there are more apartments.

It doesn’t matter much whether you are investing in villas or apartments; what really matters is the timing and duration of the investment itself. Assuming that proper due diligence is attained, property investments don’t come without risks and, therefore, need to be kept for the long term for returns to be truly realised,” Haider Tuaima, Director & Head of Real Estate Research at ValuStrat, told Arabian Business.

Tuaima added that Dubai’s residential stock currently amounts to 800,000 units, of which 15 per cent are villas and townhouses and 85 per cent are apartments.

We expect more single-family homes to come to the market; however, apartments will still greatly outnumber villas,” he added.

Speaking to Arabian Business, Ajay Barua, Client Manager at Betterhomes, said that investing in Dubai’s property market should be greatly influenced by “various factors” such as budget, preferred location, investment goals, and personal preferences.

However, Barua revealed that there has been a “surge” in townhouses and villas, mainly due to “high appreciation value and community living, as well as higher demand and limited supply,” adding that “all types of properties offer good investment opportunities.”

Echoing the sentiment, Tuaima further explained that in terms of demand and performance, “apartments were desired thanks to relative affordability and potential higher rental yields. However, villa demand was always strong, simply because of scarcity.

Best places to buy rent townhouses, villas, apartments

According to Betterhomes’ Barua, the best areas to buy or rent townhouses or villas include Dubailand, Dubai Hills Estate and Arabian Ranches.

As for apartments, Barua recommends the following areas in Dubai for buying or renting: Downtown Dubai, Dubai Marina, Business Bay, Jumeirah Village Circle, Dubai Hills Estate, and Meydan City.

Investors can use the area’s growth potential and attractive property prices to secure long-term rental income and capital growth,” he said, adding that buying or renting villas, townhouses, or apartments has advantages and disadvantages.

Advantages and disadvantages of buying renting villas, townhouses and apartments in Dubai

Living in a townhouse or villa has several potential advantages as these types of properties offer ample indoor and outdoor space, allowing residents the ability to personalise spaces and create private areas for work or relaxation, according to Betterhomes’ Barua.

Townhouses/villas typically yield higher returns on investment and lower service charges compared to apartments, enhancing their attractiveness,” he said, adding that there are drawbacks to consider.

Limited retail and educational options nearby can be a disadvantage, along with the higher maintenance costs associated with maintaining such expansive properties. Furthermore, living in a villa may entail limited access to public transportation, and the higher price point may narrow the potential market for tenants,” Barua explained.

In addition, apartment living generally has continued to be in high demand, according to him, as it provides a sense of safety and security with features like gated communities, security guards, cameras, and fire protection systems installed. However, there are also still some potential downsides.

Finding pet-friendly apartments can be challenging, limiting options for pet owners. Another downside is dealing with noisy neighbours, although this issue can often be addressed by communication with neighbours or building management to find a resolution. The void period for apartments is shorter compared to villas/townhouses,” he said.

Will prices increase for these Dubai property types in 2024?

When asked if the prices for these property types could rise in 2024, ValuStrat’s Tuaima explained prior to the pandemic in 2020, villas and apartments generally performed similarly in terms of capital gains and losses from an investment perspective.

However, after the onset of the pandemic, the real estate market was already in a downward trough phase of its typical cycle.

Buyers were looking to set up a home office so they could work from home, families needed more space to support their children in distant learning, for example, and of course, property prices were cheaper,” he said.

Currently, according to Tuaima, the prices of villas and townhouses have essentially doubled in many areas due to the pandemic-driven demand surge. As a result, they have grown “increasingly unaffordable” for some buyers.

This is at a time when some apartment communities are seeing accelerating price increases on foot of increased buyer demand (as tenants search out buy alternatives, as buyers seek areas of possible future gains). Some would suggest that perhaps apartments may now hold the best opportunity for price gains this year,” he added.

Betterhomes’ Barua concluded by adding that “there’s an expectation of continued growth across all property types, suggesting a potential increase in property prices,” fuelled by Dubai’s luxurious lifestyle, exclusive properties, and Golden Visa opportunities that continue to attract customers, especially from the upper class.

For a detailed perspective on the property market, visit: Dubai - Real Estate Review Q4 202