REIDIN, 28 January 2019
The real estate market cycle has shattered the myths of current location having a large impact on price performance, as the dominant narrative of luxury property bearing the brunt of the price correction has overshadowed locational factors such as as golf course views and/or skyscraper advantages.
Price Change: Super Tall vs Dubai Marina (2012 vs 2018)
The above graph illustrates the price change of buildings in the Tallest Block versus the general Dubai Marina from 2012 to 2018. As is clear from the chart above, there is no clear trend of outperformance; instead there appears to be a greater weightage attributable to the design of the building, rather than the height. In many cases, there has been a clear trend of under performance, belittling the axiom that it is profitable to invest in skyscrapers.
Using data from Arabian Ranches La collection, reveals that villas with a golf course view have underperformed their no-view counterparts over a 6 year horizon.
The same is true for real estate developer equity performance, especially as they resort to direct lending, raising concerns of default rates.
We opine that as the market continues to mature and head towards the world expo event, locational advantages will recede as new communities continue to proliferate at the luxury end.
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