Revealed: Dubai investors flock to large properties, defying global demand surge for smaller apartments
Dubai is defying global property market trends by showing a strong preference for larger living spaces. While many markets face economic pressures, urbanization, and a housing crisis that push residents toward smaller homes, Dubai and Abu Dhabi continue to attract investors seeking spacious properties.
In contrast, global cities like New York, London, and several Russian cities are seeing a rising trend in smaller apartments. Surprisingly, Russian cities dominate the list of smallest average apartment sizes, with Adler, Rostov-on-Don, and St. Petersburg leading with apartments averaging between 39.84 and 45.51 square meters.
Demand for Spacious Villas and Apartments
In the UAE, cities like Dubai, Abu Dhabi, and Ras Al Khaimah are experiencing a surge in demand for spacious villas and luxury apartments. Wealthy global investors are particularly interested in multi-million-dollar, super-luxury houses, indicating a shift away from the global trend towards smaller apartments.
Global Shift Towards Smaller Apartments
The shift towards smaller living spaces globally is largely driven by skyrocketing real estate prices and increasing urbanization, according to Realiste, a Dubai-based AI real estate consultancy. The trend is particularly noticeable in high-density urban centers like New York and London, where micro-apartments offer an affordable entry into desirable areas.
For example, in New York, the average studio apartment size has decreased from 63 square meters in the 1990s to just 47 square meters today. Similarly, London has seen a rise in “pocket apartments,” typically measuring around 37 square meters, to provide affordable housing in high-demand areas.
Non-Russian Cities with Small Apartments
While Russian cities dominate the list for smallest apartment sizes, non-Russian cities like Bali and Seoul also rank in the top 10. Bali averages 48.51 square meters, and Seoul averages 49.51 square meters. This contrasts with cities traditionally thought to have the smallest apartments, such as Tokyo and Hong Kong, which average around 54 square meters.
Dubai’s Dominance in Luxury Real Estate
Dubai continues to dominate the global luxury real estate market, attracting super-rich investors shifting focus from prime locations like London to the Gulf city. The emirate offers steady, high-yielding returns on investment (ROI) and competitive per square foot costs.
A UK-based Estates study highlighted Dubai’s prime property market, surpassing London in transactions for homes over $10 million. Although wealthy buyers are increasingly opting for smaller, more manageable properties for occasional stays, the trend in Dubai remains focused on larger homes.
Investment Appeal and ROI
Dubai’s combination of affordability and robust returns is unparalleled. With $1 million buying larger homes in Dubai compared to London, the emirate is positioned favorably for investors seeking high tax-free ROIs of 6-8 percent on average. The competitive cost per square foot and the high-quality lifestyle continue to make Dubai an attractive destination for global investors.
Furthermore, there is a growing trend in Dubai for apartment renovations, as homeowners invest in making their properties stand out to attract premium tenants. This reflects the city’s ongoing appeal and the lucrative opportunities it offers in the real estate market.
Reference: Arabian Business
