Generalizing in Dubai realities can cost you earnings, how to look at earnings in Dubai correctly

If we look at the average statistics, it turns out that the highest yield in Dubai is brought by smaller apartments. Figures of 7 to 10% per annum are often given, while villas and townhouses are at a lower level. Although these data suggest something, they do not show the whole truth. The real estate market in Dubai is too dynamic and diverse to rely only on averages. If an investor knows exactly where to invest, the numbers may look completely different, and it is in premium communities with larger apartments or villas that the greatest potential may be hidden.

In a city of more than four million people and one of the fastest growing real estate markets in the world, statistics vary by location, property type or developer. While one segment can see a drop of around 10%, another, on the other hand, shoots up to hundreds of percent in the same period. Therefore, when investing in Dubai, it is not enough to talk about the “average” of the market - you need to look at specific communities and types of real estate.

View from the height of the Palm Jumeirah

Let's take a look at the iconic palm tree in Dubai with luxurious villas. This exclusive community is among the most powerful on the market and has seen an astronomical increase in prices since its inception. Since the project was completed ~20 years ago, property prices on Palm Jumeirah have risen by more than 2000%.

Luxury segment breaks records in growth

The real estate boom in Dubai is especially pulling the luxury segment. In 2022, Dubai's prime (luxury) residential market saw a record price increase of 44%, the most in the world. The surge continued in 2023 and 2024, supported by an influx of wealthy foreign buyers. About 5,200 high-net-worth individuals (HNWIs) immigrated to the UAE in 2022, which was the highest net addition of millionaires in the world. This wave of wealthy residents is pushing the demand for first-class villas and large apartments. The result is an enormous increase in prices and rents.

Palm Jumeirah and Al Barari (famous for their luxurious villas) are among the most expensive. The average rental of a villa in AlBarari exceeds AED 1 million per year, while on Palm Jumeirah the average rent of an apartment reaches almost AED 257 thousand per year

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Thus, luxury villas not only break records in valuation, but also in the absolute price level and amount of rent, which testifies to the huge demand in this segment.

Large apartments and villas vs. studios: which is more worth it?

The pandemic has reoriented buyer preferences in favor of more spacious housing. Villas in Dubai have risen in price by an average of 30% since the beginning of 2021, while apartments by 21%. Larger properties have generated higher returns for investors, and this is also true within the housing segment. According to data from the Property Finder portal, the prices of larger apartments grew faster than small ones: two-bedroom apartments recorded an increase of up to 17% year-on-year, while one-bedroom apartments and studios only around 10%. Thus, the demand of families for more space (more rooms, balcony, study) pushes up the value of multi-room units. In addition, construction does not keep up with the demand for villas — up to 70% of newly completed units make up apartments and only 30% are villas or townhouses.

For example, average villa prices in Dubai are already 11% higher than they were at their peak in 2014, while smaller apartments have not yet reached this milestone.‍. Thus, in the long term, large real estate proves to be a more durable and profitable investment.

Although statistics show that smaller apartments and studios achieve a higher rental yield on average, a correctly chosen investment pays off even more. Especially if it is a spacious apartment or villa.

How to approach kinvesting in Dubai

Dubai is a dynamic market where universal advice does not apply - the success of an investment depends on the right choice of segment. Instead of extolling the “average” market or small apartments, it pays to focus on quality, spacious properties in verified communities. Examples from recent years show that luxury villas and high-rise apartments in good locations outperform the rest of the market in terms of valuation. Dubai's real estate boom is driven by a rich clientele who are looking for exceptional housing — family villas with gardens, penthouses with panoramic views or spacious residences. For investors, this is an opportunity to take a ride on this trend. Of course, every investment requires careful analysis; but currently the market plays into the hands of those who prefer larger properties to studios. If we “record in our own gate” and generalize the entire market, we could overlook these differences. That is why it is crucial to track data for specific segments and exploit the potential where it is greatest — in large apartments and houses that have proven their investment value in Dubai for a long time.

Dubai is not a homogeneous market, and success lies in a specialized approach. Therefore, one should not rely only on overall statistics, but look for quality investment opportunities. These are the ones that can make your investment truly profitable.