Parks are considered one of the most valuable amenities for high-end buyers planning to invest in property in Dubai.
A survey of the super-rich around the world on how they perceive the property market in the emirate singled out the abundance of green space, specifically parks, as almost as desirable for global high-net-worth individuals (HNWI) as having water views.
It is one of several trends identified in Knight Frank's report Destination Dubai – the ultimate guide to global demand for Dubai real estate.
Ready or not?
The super-rich would rather spend their money on properties they can take possession of immediately than a project that would be ready down the line, the report revealed.
More than half of those surveyed said they would rather buy something complete instead of an off-plan property.
“HNWIs are not necessarily going to want to buy something that’s going to be a construction site for a long time,” said Faisal Durrani, head of Middle East research, Knight Frank.
“That’s why somewhere like the Palm Jumeirah is so popular. It took 18 years to get to where it is today and that helps to make it attractive, with the schools, malls, resorts and hospitals.
“You can’t offer that in a brand new master plan because it takes time to establish that sense of community.”
Parks are the priority
Of all the local amenity options offered, parks (85 per cent) were an overwhelming favourite among HNWIs.
The desire to be near a park was highest among East Asians, at 95 per cent, while Saudis considered it the most important factor.
With a shortage of waterfront plots, combined with an expected resurgence in buyers from mainland China, the report said developers could in theory create demand through the inclusion of parks or the positioning of parks as community anchors
“The city has virtually run out of ready or almost-ready waterfront development sites,” Mr Durrani said.
He said this could explain why public parks were named as the most important consideration when buying a property.
“Parks represent an interesting opportunity for us, because of the limited coastal development sites,” he said.
“We could potentially create new desirable prime areas farther inland, away from the coast.
“Inland communities that put greenery forward as their main USP could soon qualify as prime communities.”
New prime communities
Dubai's prime residential neighbourhoods – the Palm Jumeirah, Emirates Hills and Jumeirah Bay Island – have dominated luxury home sales, with average transaction prices for $10 million-plus homes reaching Dh8,800 per square foot during the first quarter.
However, more neighbourhoods in Dubai are likely to be classed as prime if they continue to achieve multimillion dollar sales figures.
Mr Durrani said to qualify as a prime neighbourhood, at least 10 per cent of deals must be at more than $10 million for three consecutive years.
The Al Wasl-Dubai Canal corridor is one such location, where branded residential sales are contributing to its emergence as a hot spot for UHNWIs.
Knight Frank said Tilal Al Ghaf – located beside Sports City – is another neighbourhood that has quickly joined Dubai’s growing list of ultra-lux areas.
It said three homes sold for more than Dh90 million ($24.5 million) last year, and seven villas sold for more than $10 million in the first quarter this year.
“We are tracking it and the communities we feel most likely to follow will be Jumeirah Islands, Tilal Al Ghaf and Al Barari,” he said.
Lack of available properties driving up prices
With just 289 homes in the city’s prime locations scheduled for completion by 2025 – only 155 of which are villas – there's an undersupply in the luxury property segment.
The knock-on effect is pushing up prices. Knight Frank says while the mainstream market is likely to experience growth of 5 per cent to 7 per cent, prices in the prime market will expand at double this rate, about 13.5 per cent.
“The demand for luxury properties is increasing and there is already a shortage of prime developments and neighbourhoods,” said Paul Sharland, manager for off-plan and investments with haus & haus real estate.
“That is why prices in popular prime areas such as the Palm Jumeirah have skyrocketed over the last year, with HNWIs willing to pay the 'market price' for the property they want and desire.”
A lack of available waterfront properties means that more developments are being created inland, he added.
“As long as the communities are green with lush landscaping, water – lagoons and canals – and have five-star facilities, then being near the beach is no longer a must,” he said.
“These properties will still be well sought after and achieve premium prices.”
How the rest of us are affected
The report touches on how the increase in property prices has affected the majority of Dubai residents when it comes to the issue of affordability.
“With rising interest rates, the upwards creep in inflation and rising base rates, households have undoubtedly seen their outgoings increase over the last two years,” the report says.
“The wave of Ultra HNWI-linked capital targeting the city has primarily driven this solid price growth.
“When it comes to affordability, however, for most of the city, the ratio of household incomes to house prices remains ‘affordable’.”
This refers to the internationally accepted ratio that house prices, except those listed as prime, do not exceed six times the annual household income.
Abu Dhabi rising
While Dubai is the most popular for global HNWIs looking for real estate in the UAE, the appeal of other emirates appears to be rapidly rising.
In particular, Abu Dhabi’s growth as a cultural and arts centre appears to be working in its favour, with 57 per cent of global HNWIs viewing the capital more favourably as a result. This figure rises to 70 per cent among East Asian HNWIs.
When it comes to committing to a real estate investment in Abu Dhabi, 74 per cent are interested in exploring investment options, but the challenge, as has been the case historically, is to convert this interest into transactions.