Dubai: When could Palm Jebel Ali investors see their capital gains doubling?

The Palm Jebel Ali project will play a significant role in maintaining the rally in Dubai’s property market in the coming years, especially due to the limited supply of prime sea/waterfront properties in the market.

Going by the industry executives’ views, investors in the master developer Nakheel’s launch of the first set of villas could see their capital gains doubled in five years when their investment is complete.

In September, Nakheel, the developer behind the Palm Jumeirah and Palm Jebel Ali, launched villas with a starting price of Dh18 million. Following a strong demand, the Dubai-based developer released the second set of villas.

Currently, 10 fronds have been released on Palm Jebel Ali, identified by titles from Frond A to J. This contains approximately 1,200 villas and more fronds and villas are expected to be made available.

According to Nakheel, the entire project is projected to be fully completed by 2027 and will encompass more than 80 hotels and resorts, as well as a variety of residential, commercial, and entertainment options.

Demand for waterfront properties in Dubai has been pretty strong due to a shortage of supply, resulting in prices rising across the board, even doubling in some instances in the past few years.

100% capital gains?

“If the current situation remains unchanged, investors considering a villa priced at Dh18 million in Palm Jebel Ali have the potential to achieve a substantial return on their investment. Given the current market conditions, it

is anticipated that investors in this segment could experience an impressive 100 per cent capital gain once their investment is completed. This significant increase in value reflects the favourable dynamics of the market, including the strong demand for beach-facing properties and the unique value proposition offered by Palm Jebel Ali, which includes private villas with beach access,” says Ayman Youssef, managing director at Coldwell Banker.

He added that the scarcity of such luxurious properties in the primary market makes Palm Jebel Ali an attractive option for investors seeking sizable returns in a relatively short period. “The development’s ability to deliver impressive returns within a 5-year timeframe is an appealing factor that is likely to attract investors seeking a distinctive lifestyle.”

Adil Akhtar, founder of Foremen Fiefdom, sees a villa launched at Dh18 million could bring a return on investment (RoI) of approximately 35-45 per cent over 5 years based on a projection of a general RoI rate of 7-9 per cent increase per year.

How long can Palm Jebel Ali support the rally?

He believes that Palm Jebel Ali is a pivotal contributor to sustaining the property market rally in the long run as the overwhelming response was reminiscent of Dubai’s property boom during the pre-financial crisis period of 2008-2009.

The inherent value of this project is expected to appreciate gradually, ensuring substantial returns on investments. “Therefore, Palm Jebel Ali is poised to be a driving force behind the local property market rally for the next 5-7 years.”

It’s not just financial returns that entices investors, Akhtar suggests that Palm Jebel Ali embodies prestige, exclusivity, and generous plot sizes, making it an attractive prospect for both investors and end-users.

Ayman Youssef also noted that Palm Jebel Ali will help sustain the overall rally by addressing the scarcity of beach access properties and diversifying the available property offerings.

“The influence of Palm Jebel Ali on the local property market’s sustainability is expected to be significant mainly due to the current market dynamics, which show a strong demand, especially for beach-facing properties. With limited options for private villas with beach access available, this development offers a rare and compelling opportunity for those seeking premium real estate investments. As the project progresses, it is expected to greatly contribute to the vibrancy and long-term sustainability of the property market, solidifying its position as a crucial and enduring player in Dubai’s real estate landscape,” he said.

Demand in the secondary market

Adil Akhtar of Foremen Fiefdom confirmed that demand for Palm Jebel Ali villas on the secondary market remained robust, driven by their luxury and exclusivity.

“While pricing specifics may fluctuate, it is noteworthy that at present, prices for 5-7 bedroom villas on Palm Jebel Ali are significantly lower than comparable properties on Palm Jumeirah, making them a relatively cost-effective investment. The combination of the scarcity of ultra-luxury villas in Dubai and the allure of beachfront properties has contributed to heightened demand. The potential for substantial returns on investment remains a compelling factor for investors, and it is anticipated that Palm Jebel Ali’s secondary market will experience price increases.”

In a market with a limited supply of prime sea/waterfront properties, Palm Jebel Ali stands out as a premium investment, attracting high demand from both end-users and investors.

He said the development is expected to draw a diverse audience, including local, regional, and international investors and home-seekers.

Akhtar sees private developers also commencing their projects on Palm Jebel Ali in 2024 as this timeline aligns with the ongoing development of the island’s infrastructure.

“There has been notable interest from private developers in participating in the project due to its planned diversity, including hotels, residences, retail, and entertainment facilities. This interest from private developers is expected to materialize as the project progresses,” says Foremen Fiefdom founder.