April 20, 2024

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Investing in luxury beachfront property: is it worth it?

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By Ali Sajwani

I’ve been fascinated with the ocean for as long as I can remember. I’ve always found the sea to be a calming influence, and since learning to scuba dive, I’ve developed a deep appreciation for marine life. For me, aquatic environments are among the most exhilarating to be found anywhere on the planet.

It’s therefore no surprise that I love spending time at the beach. While diving holds a special place in my heart, I’m passionate about a range of marine activities, from wakeboarding to sailing. And when I’m not getting my adrenaline fix, there’s nothing I enjoy more than strolling along Dubai’s pristine coastline with my family.

I imagine this love for beachfront living is something that I have in common with many other UAE residents. After all, those lucky enough to call the Emirates home are spoilt for choice when it comes to coastal destinations and activities – and our leaders are working diligently to capitalise on this unique selling point. Dubai’s plans to develop 54km of beaches, for example, are expected to significantly increase the city’s luxury waterfront property inventory, providing an additional boost for our already-booming real estate market.

The question is: does luxury beachfront property represent a worthwhile investment?

Capital appreciation

The first thing that any would-be investor should note is that Dubai’s waterfront property rates have more than doubled in certain prime locations since the global pandemic. While one may expect developments such as Palm Jebel Ali – which will add 110km to the Emirate’s coastline – to dampen demand, industry experts anticipate it will take several years before the segment begins to plateau.

What’s more, demand for coastal real estate is by no means limited to Dubai. Property prices in Ras Al Khaimah’s Mina Al Arab, Al Marjan Island and Al Jazah Al Hamra locales are expected to witness a 21% uptick over the coming year, according to figures released by Realiste. Ras Al Khaimah welcomed record numbers of tourists in H1 2023, with luxury beachfront resorts cited as the primary driver of property demand and prices in the Emirate.

Property sales in Abu Dhabi are also on the rise, with beachfront locations such as Al Reem Island, Yas Island, Al Raha Beach and Saadiyat Island proving most popular among apartment buyers, according to Property Finder.

The upshot is that demand for luxury coastal real estate in the UAE looks to be on course for further growth, meaning any investors who are still considering diversifying their portfolios with beachfront assets haven’t missed the boat.

Strong rental yields

The high rents commanded by luxury beachfront properties represent another major plus point for prospective investors. In fact, the waterfront neighbourhoods of Bluewaters and Jumeirah Beach Residence were identified as two of the three highest-yield rental areas in Dubai by Realiste earlier this year.

On a broader level, the UAE’s property market continues to offer attractive rental returns for investors. In Dubai, gross rental yields averaged 7.2% in the final month of last year, up from 6.19% during the corresponding period of 2021. While Abu Dhabi’s rental yields experienced a marginal decline during the same period, they still registered a healthy average of 6.37% in December 2022. Several locations in Ras Al Khaimah, meanwhile, witnessed impressive rental yields during the first half of 2023, with highlights including 11.61% returns among apartments in Yasmin Village.

Put simply, beachfront properties in the UAE represent potentially lucrative additions for investors looking to bolster their rental assets. Demand for these units, both as full-time residences and vacation rentals, has remained strong, resulting in consistently higher yields in comparison to inland properties.

Sought-after locations

Right now, the numbers certainly add up. Whether you’re looking for a home that will appreciate in value over time or an asset that can offer healthy rental returns, UAE beachfront real estate currently boasts all the hallmarks of a sound investment.

The reason these assets appeal to me, however, is more emotional. The fact is that regardless of how much the Emirates – or any other nation, for that matter – extends its coastline, waterfront properties will always have the advantage of scarcity over inland alternatives. Combined with other selling points such as exclusive beach access, luxurious amenities and breathtaking views of the Arabian Gulf, this leads me to believe that these assets will continue to outperform their counterparts regardless of wider market conditions.

Investing in luxury beachfront real estate also makes sense from a diversification standpoint as it represents a sought-after niche in an already strong sector. By adding coastal assets to your existing portfolio, you can help spread your risk while opening up fresh avenues for rental and appreciation-related returns.

So, is beachfront property worth your consideration? Well, there’s no such thing as a sure thing when it comes to investment, but you won’t find many stronger prospects in the UAE’s real estate market.

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