Dubai real estate sector requires pricing that is sustainable and accessible for middle-income families.

Whenever the demand for properties rises and developers increase their profit margins, middle-income families find themselves priced out of Dubai's real estate market. The current range of studio apartment prices, spanning from Dh800,000 to Dh1 million, suggests a potential "overheating" in the Dubai real estate market. Officials and market analysts express concerns that investors purchasing properties at these prices might struggle to sell them at the same value if the market softens in the future.

For instance, a studio flat purchased at Dh800,000 might yield a rental income of around Dh40,000 annually, translating to a 5 percent yearly return before considering service charges. If service charges are factored in, the return on a Dh800,000 investment could dip to less than 4 percent. This makes real estate investment seem less economically viable, especially when compared to other investment options that offer potentially higher returns.

Dugasta Properties Development, a property developer based in Dubai, aims to address this issue by introducing affordable homes with starting prices as low as Dh400,000 for studio apartments. Additionally, the company offers an 8 percent annual guaranteed return on investment for the first five years, subject to specific terms and conditions, for all apartment types. This initiative seeks to rebalance the real estate market and attract new buyers who were previously priced out due to the high cost of acquiring homes.

Furthermore, Dugasta provides a buy-back option after the five-year period, again contingent on specific terms and conditions. This means that the property can be sold back to Dugasta at the original sale price, effectively enabling the homebuyer or investor to recoup 40 percent of their investment within the initial five years.

Tauseef Khan, the Founder and Chairman of Dugasta Properties, emphasizes the importance of economic sustainability in the real estate sector. He believes that the offered price point of Dh400,000 for a studio apartment is both affordable and sustainable in the long run, even if the market experiences a downturn.

The Dubai real estate market has witnessed substantial growth, with the number of land and property transactions increasing by 76.87 percent in the first half of 2023 compared to the previous year. This growth has led to a rise in property values, making affordability a significant concern for both middle and high-income families.

Amidst these developments, experts like Anastasia Petrova caution against the potential for another housing bubble, drawing parallels to market crashes experienced in Dubai in 2009 and 2015. As Dubai focuses on sustainability, economic stability within the real estate sector remains a key consideration.