Dubai Villas: Scarcity, Demand & Opportunity

There was a 26% increase of price per square foot for villas in 2024. Dubai has no property taxes and no capital gains taxes. The rare villa is high quality and well-renowned, with an internationally and globally recognized name for developers, and it's in the middle of Dubai in Muhammad bin Rashid City. If you've been watching the Dubai real estate market, then you've been hearing about what's happening with villas. There's a 26% increase of price per square foot for villas in 2024. You're seeing a shift in the demographics of people moving to Dubai. A few years ago there were a lot of single people coming here, but now you have families that are moving here and there is a scarcity of villas. I'm talking more and more about villas on this trip around Dubai because even though the villa communities are rare and it's a great opportunity to get in, it doesn't mean that every developer is a smart investment strategy. What I've been doing is vetting through the developers that have global recognition, brand awareness, reputation for timely delivery, if not delivering before they're supposed to, and a proven track record for its investors. That's why we're here with Jack right here from Leo's Developments. Actually, first before we get into villas specifically, Jack, may you share a little bit of background about Leo's in general? Of course. Look, in the off-plan market, who you're buying from is arguably the most important thing in terms of global brands that delivered. Leo's... not many people in the market will know this, but we're a British developer by background. The company started around 2012. In that time, we've handed over around 12 projects in the greater London area where I'm from. A lot of these projects, GG, we've actually been the main contractor on. So we've actually overseen the full build timeline. What I'm trying to say is construction is what we do best, right? Specifically in the UK market. That's where we come from and we're now bringing this approach, this European construction and developer approach to the market out here. May you name some of the areas because you were sharing with me that my American investors will even be familiar with, such as Mayfair. What are some of the other areas that you've developed in London? Mayfair we've also developed in, and also the affluent suburbs of London like Hampstead where we just handed over 10 family housing buildings, houses which sold around 2 million pounds per plot. As well as large scale regeneration. What comes to mind is our project in Weybridge which is a suburb in southwest London where we have a master plan for around 250 units, fantastic houses and apartments. And then we've done buildings in Wimbledon. We've done buildings up in Luton. We've done everything from boutique high value areas all the way to sort of regeneration in the London market. When did you come to Dubai? Came to market here around 2 and a half years ago. How many projects have you launched so far in Dubai? We've now launched nine projects. Two of which we're about to hand over and the rest are under construction, apart from these villas which will be on site in about 5 weeks. If I understood correctly, one of the handovers is even 6 months before it was supposed to be handed over. Our first two projects, which I always speak to investors as case study, it's all well and good saying this is our brand, but this is something that's proven. Our first two projects were estimated to hand over Q4 of this year and they're both looking to be handed over around May time this year, so it's an early handover. I've been inside and the quality looks great and they've also appreciated in value. Fantastic for an investor. That's what we need to get into, right? I know you were specific to speaking to investors. Of course, the whole another conversation can be about the end user that's coming here and needs to find a villa community. It's funny you say that because whether you're dealing with an end user or an investor, at the end of the day, these projects are built for end users because even if you're an investor, at the end of the day, either a tenant is going to be renting it or an end user is going to be buying it. So all projects are made in mind for the realistic user of that property when it comes to handover, right? All projects by top tier developers, not necessarily all projects. Because if we look at some other developers, sure it's great to buy it, you get in cheaply, you get a project here in Dubai, but not necessarily are you going to do well when it comes time to rent it out or resell it because the product itself is not constructed of high quality by a reputable brand that has a proven track record for its investors, right? That's what we're here today to talk about Leo's. Leo's as a brand is a brand that's becoming now known in this region. The growth over the last two years has been unbelievable. Fantastic. That right there is one of the most important aspects of an investment, which is who you invest in. Absolutely right, absolutely. In terms of reliability and the reputation of the developer, it's most importantly to hand over your project as it's seen on the brochure. As seen on the brochure, yes. And on time and good quality. And that's when the investors will benefit and of course the end users thereby buy, or the end users that will move in on handover. Correct. So now that we have those points out of the way, let's talk about what's been happening in the villa segment of housing here in Dubai. Yeah. So the villa market in Dubai is absolutely booming and this is mainly driven by a complete lack of supply and a huge demand, as you mentioned earlier. Now as Dubai is progressing more and more families are relocating from various parts of the world. Right. And within this villa, with this lack of supply, we have a project which is located in quite a prime location. Now within the lack of supply, a lot of the supply that is being brought forward over the next two and a half years or so is being developed in areas like Dubai Land or Dubai South or outside of Emirates Roads, sort of out further towards the desert. Now a limited supply of these, i.e. where we're developing, is in Maidan, which is you know 15 minutes away from DIFC, the financial district of Dubai. Fifteen minutes away from Business Bay where professionals like me and like you work. So it's a product that is fundamentally lacking in the market, right? And also something that in the coming years, 2 years time, will be non-existent, be no more off-plan, exactly. Because there's only so much land there. Maidan is Muhammad bin Rashid City, so it's actually the Ruler's own area, right? And you're talking about green and the sanctuary. There's all these amenities that are in that area that cater to families living there. Would you consider it a master community? So we're a part of MBR City, which is of course a master community. And explain what a master community is for Americans. A master community is usually brought forward by government developer. Interestingly enough, there's actually a few different communities in the Maidan district. Maidan as a whole covers everything from District One to Shaheen Heartland to the Maidan Racecourse, all the way out to District 11 up E6 Road and even Dubai Hills, I'm pretty sure, is considered part of MBR City, right? So it's a huge government master planned area of Dubai and it's going to become such a strategic and well-due to its proximity to downtown and Business Bay. It will become so crucial to the market here I think. So now thank you for sharing that because the idea of a master community, and by the way that addresses the population explosion, not even expansion, let's say explosion, right? Hitting 5.8 million and according to the Master 2040 Plan to hit 7 million by the year 2040. Some people on the outside will say how are they even going to handle all of this? And obviously, you know, you see the RTA making new announcements every day about connectivity and new bridges and then different forms of transportation from your metro being the longest driverless metro in the world to the idea of flying taxis and people pods and all this. But that's where also the idea of a master community comes into play because you go to your community and it's the schools, the hospitals, the gym, the retail, all there in your master community. And so that will also help when you have all these people moving. Yeah. So that's a matter of infrastructure, right? Because you know it's so interesting in Dubai in terms of the delivery of these infrastructure projects, i.e. new road routes, new things that reduce traffic times in metro lines. In the UK where I'm from, it takes a lot more time to get these infrastructure projects over the line. So I think about things like HS2 and even the M25 back in the day. They take so long because there's so much jurisdiction and permits, etc. But you know, infrastructure projects in Dubai, they delivered so fast because it's so centralized in terms of management. And you can even see that when there was for example the floods, how quickly they also overcame situations that are not expected because they resolve situations so quickly. So now let's move over to your location. We talked about it but let's talk about numbers, the villas, the opportunity for investors, for those specific villas. Sure. So the way we've always done it in the UK, the way we work out, you know, what something might hand over in two years time or even in six months time, we work with comparables. Okay. So let's look at the secondary market first. What's being sold on the market today in MBR City ready communities like District One or Shaheen Heartland? You're looking at entry prices around 3,000 dirhams per square foot. Now these will be unrenovated, basic units from the developer. Anything refurbished in, i.e. District One or Heartland, they're going for 3,000 plus. District One today can go up to 4,000 plus for the refurbished unit. So what's so important for an off-plan investor is seeing the difference between the off-plan price and the secondary market price. And not all locations actually have that. Some locations the off-plan price will actually match too closely the secondary price. So the villas we're offering today are looking at between a five and a six bed, between 2,300 and around 2,500 for the more premium units, right? So this price per square foot that we can enter at, of course, on a payment plan based on what that unit might be worth if it was ready today, i.e. in the region of 3,000 plus, this is where investors are gaining their returns. But this is where the appreciation is coming. Yes. And then what do you expect with regards to rental returns if you're able or comfortable to share those numbers? Sure. Look, I always, if it's an investor or anyone, I try to be as conservative as possible and look at the facts of the market. Okay? So we're selling five beds in District 11. Let's look at say a basic Sidra five bedroom in Dubai Hills. This is renting in the region of 700 to 800,000 dirhams per year. Now, if you applied that rental income to say our off-plan in today's market, you'd be looking at maybe 5.5% rental returns a year. Now that's bottom line very conservative because over the last five years, you know, Dubai's grown on a macro level. So rents are increasing. I don't know what percentage per year, 5% a year, but then also the spec that we're delivering, right? We're delivering units that don't have to gut and refit. And what about the amenities that you have? Exactly. So we could see these units possibly creeping up close to that million dirham mark, 850, 900, 950. And that's when these sort of investors can expect upwards returns of 7.5% to 8%, which is, you know, no property taxes, no capital gains taxes in Dubai. The rare villa, high quality, well-renowned, internationally, globally recognized name for developers, and on a 50/50 payment plan and in the middle of Dubai in Muhammad bin Rashid City. And you know I'll tell you one more thing. The 50/50 payment plan, that's one of our standard basic payment plans. But we actually have a different payment plan that we offer certain clients and that's a post-handover payment plan. So for investors abroad who might not know what a post-handover is, that's when you actually pay off the remaining percentage on the property after handover, i.e. when you already have the keys and living, or renting that out. So you're collecting rent and you're on a 0% payment plan with Leo's? Yeah. And a post-handover in the villa market is extremely rare. So to be able to, even for the investor to be able to take their unit to market on handover with the two-year post for the ultimate end user, is another standout factor or merit of what we're selling. Right. Absolutely it is. So I am so glad that we got some time to sit with you, Jack, so you can really walk our investors through it. And for those of you who want to ask more questions, feel free to do so in the comments. Jack and I will be replying, or reach out to me and we can set up a Zoom call and go through this further. And in the next couple of weeks, I'll be taking some shots of a show apartment or show villa just so you could see that quality and you can visualize it. But we'll try to add some videos and photos to this video so people can also see the level of quality that Leo's is delivering in their villa community. Thank you, Jack. You're welcome. All right. Happy investing.