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One of the world's hottest property markets in recent years
Palm Jumeirah, the iconic man-made archipelago extending into the calm blue Gulf waters off the coast of Dubai, has been one of the world’s hottest property markets in recent years.
Always one of the most exclusive destinations in Dubai, asking prices and transaction values soared during the pandemic.
Now, the Palm Jumeirah market is cooling a little, but most experts predict long-term growth overall and certain sub-sections of the market offer significant potential for new investors in the coming months and years.
Palm Jumeirah's Property Market Performance
Palm Jumeirah property statistics for completed 4-bedroom villa properties:
- The average asking sales price in Palm Jumeirah in March 2023: 24m AED
- The average transaction sales price in Palm Jumeirah in March 2023: 21m AED
- The average asking sales price in Palm Jumeirah in March 2023 per sq ft: 3,00 AED
- The average transaction sales price in Palm Jumeirah in March 2023 per sq ft: 7,000 AED
One of the issues facing real estate investors in the short term is that the Palm is the most expensive place to buy property in the whole of Dubai.
This is because existing investors and owners have just experienced a 45% capital growth increase over the past year to 18 months.
As Covid 19 forced many governments all over the world into imposing lockdowns, the global race for space headed to Dubai. The emirate was swift in its response and vaccine rollout, and subsequently, one of the first economies to bounce back. The Palm was the natural first choice for high-net-worth individuals from all over the globe looking to relocate during the pandemic.
Now, the average property price on The Palm is around US $5 million and some of the larger properties – the 5 and 6-bed villas – have been the most in demand.
That said, the Palm has a surprising array of property types and some of the less expensive smaller properties, are still exhibiting very strong capital growth.
Average capital appreciation in Palm Jumeirah over the past 12 months
- Palm Jumeirah overall:13.4% capital appreciation
- Palm Jumeirah 2-bed property: 15.4% capital appreciation
- Palm Jumeirah 3-bed property: 10.0% capital appreciation
How to choose a property investment in Palm Jumeirah
Despite the recent focus on larger villas, Palm Jumeirah does offer a strong mix of property types.
Investors seeking apartments could look to acquire Shoreline units or units in the Crescent. These are currently the most sought-after locations within the Palm for smaller 1, 2, and 3-bed properties.
Investors wishing to acquire villas could first look at Signature Villas and Garden Homes, both of which have been very popular with other buyers recently.
Palm Jumeirah real estate outlook
What investors find appealing about the Palm market in particular is that it is world-renowned as a destination, and the demand will always be there, yet space is very limited.
There was some recent development work on the trunk and selected new properties do become available from time to time, but going forward the vast majority of property transactions on Palm Jumeirah will be acquired on the secondary market. This, coupled, with the finite supply, means price floors are somewhat protected and growth ceilings can be very high – as we have just witnessed.
That said, the market has just experienced extraordinary growth, driven by global societal and economic trends, investors should not expect prices to continue to rise at such a pace.
PALM JUMEIRAH RENTAL MARKET
Making a consistent and strong rental yield from an investment in Palm Jumeirah is not as straightforward as it is in some of the other more mature markets such as Business Bay or Dubai Marina. However, some investors are still recorded very substantial ROI from lettings activities.
Obviously, the massive recent capital growth immediately presents a problem for investors seeking to return high yields. The Palm does command some of the highest rents in the whole of Dubai, but average yields now sit at 4% or so.
The investors who realise yields far beyond this market average focus their lettings activity on the tourist appeal that the Palm has.
If investors are willing to enter the short-term letting market, properties on the Palm can make substantially more rental income.
Starting rental values for Palm Jumeirah property
- Average rental price for Palm Jumeirah properties March 2023: 950,000 AED
- Average gross yield for Palm Jumeirah properties March 2023: 4%
Palm Jumeirah location and lifestyle
Many of the world’s rich and famous specifically sought out Palm Jumeirah during and after the pandemic. It offers a lifestyle few other places on Earth can match.
Even now, almost 25 years after its launch, the Palm remains one of the only places in Dubai where residents can acquire and live in a property that has access to its own private beach.
What is the mix of off-plan and completed properties in Palm Jumeirah?
As mentioned, space is limited on the Palm, and the vast majority of construction has been complete for many years.
Although, off-plan opportunities are available – some current completion dates extend to Q4 2024 – most properties on Palm Jumeirah are acquired on the secondary market.
Is Palm Jumeirah only a tourist destination?
Palm Jumeirah is perhaps the most well-known as a leisure and entertainment destination, and it is close to some of Dubai’s most popular and iconic tourist hotels such as the Burj Al Arab and Atlantis, yet it is not only a tourist destination.
The archipelago has a very favourable location and residents have access to several of Dubai’s business centres nearby and elite educational institutions.
What investment budget do you need to buy property in Palm Jumeirah?
Completed 1-bedroom apartments in Palm Jumeirah have been acquired from 3,599,999 AED in the past 12 months.
However, the Palm is widely viewed as one of the most prime markets in the whole of Dubai, and for the past few years prices have had double-digit growth year on year.
Most investors view the Palm as a unique investment opportunity and have the budget that allows them to acquire a unique property.
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