Dubai's Palm Jebel Ali Attracts Long-Term Investors with Promising Potential

Long-term investors are becoming more and more interested in Palm Jebel Ali, which stands out as the best-performing area in Dubai based on sales during the fourth quarter of the previous year.

According to industry executives, investors are profiting from the three-year surge in the local real estate market by selling their units at premiums of up to 10%. Palm Jebel Ali is expected to be one of the next major destinations in Dubai that millionaires and billionaires are vying for, following the success of Palm Jumeirah.

In September of last year, master developer Nakheel Properties started to build villas on the future Palm Jebel Ali, after the Dubai government relaunched the project. The master developer later introduced more villas, to great demand from both domestic and foreign investors.

While some are thinking about relocating there in the future, most are more interested in the potential capital growth given Dubai’s rapid expansion. Investors have a lot of hope.

Investors view newer communities as this, the next big thing in that direction, as areas like Palm Jumeirah age.

According to research analyst Mayed Al Rashdi of Emirates NBD Research, Palm Jebel Ali was the best-performing region in Q4 2023 in terms of sales value, bringing in Dh14.2 billion. Business Bay came in third with Dh5.1 billion, and Dubai Marina came in second with Dh8.3 billion.

“In the prime villas sales segment, Jumeirah Islands and the Palm outperformed their peers in 2023 with a surge in prices of 33 percent year-on-year and 36 percent year-on-year in December, respectively,” Al Rashdi said in a note.

According to Farooq Syed, CEO of Springfield Properties, iconic projects like Palm Jebel Ali are crucial in reshaping market expectations for the luxury villa segment and creating new pricing paradigms that will eventually become the standard for both luxury and well-thought-out urban planning. This is why they are helping to stimulate Dubai’s off-plan market dynamics.

“Palm Jebel Ali stands at the forefront of this shift, embodying a blend of luxury, innovation, and sustainability meticulously designed to meet the standards of today’s global investors. With Dubai’s real estate sector registering Dhs35 billion in sales in January 2024, and off-plan sales witnessing a 25 percent year-on-year growth to approximately Dh15 billion from Dh12.2 billion in January 2023, it’s clear that developments like Palm Jebel Ali are shaping the future of luxury living. This trend is not just transforming the Jebel Ali district but is also a testament to Dubai’s position as a top destination for high-end investment,” said Syed.

MOSTLY INVESTORS

Liam Chase, senior developer property consultant at Allsopp & Allsopp Group, said the response to Palm Jebel Ali has been positive from buyers and investors! “We’ve seen the launch of six fronds, and around 95 percent of the properties have been sold – which shows strong promise for the area… With the soaring demand seen across the launch of the first frond, two more fronds were launched to meet the market demand. Although, there hasn’t been any significant change in pricing,” Chase said.

“In terms of buyers’ preferences, we have seen a big influx of long-term investors seeking out future investment prospects, seeking waterfront living where they can step out directly onto their private beach. That’s their long-term vision – to create a community similar to what exists on the Palm Jumeirah, but with a much newer and more modern style,” Chase said, adding that the majority of buyers we’ve seen are investors.

 SELLING AT UP TO 15% PREMIUM

A senior consultant at Allsopp & Allsopp Group stated that many investors in the market are selling at premiums ranging from 5% to 10%. However because there is still stock with the developer that needs to be sold, resales have been difficult.

“Once this developer stock diminishes, sellers may have a better chance of achieving the premiums they desire. Additionally, potential buyers may be holding out for new launches, anticipating potential price increases. If we see prices rise with these new launches, reselling at a premium may become more feasible,” he said.

As the area gains traction with more launches, Chase sees more consistent growth. “For now, we can expect average performance similar to other areas in Dubai, unless the developer introduces unexpected launches in the market,” said Chase.