When deciding between investing in a townhouse or an apartment in Dubai’s real estate market, several factors come into play. While both asset classes have their benefits, townhouses are currently emerging as a more strategic investment choice. In this article, we will explore why townhouses hold more potential by analyzing supply constraints, demand trends, developer offerings, and project examples. We will also compare starting prices, sizes, and communities for both categories.
1. Limited Supply of Townhouses vs. Oversupply of Apartments
Developing townhouse communities requires significant capital, starting from AED 400-500 million due to the high cost of land acquisition and construction. As a result, only a few developers in Dubai are able to introduce townhouse projects. Some of the key players in this space include:
Key Developers for Townhouses:
- Emaar Properties
- Project: The Valley by Emaar
- Area: Dubai-Al Ain Road
- Starting Price: AED 2.48 million
- Size: 3-bedroom units from 2,000 sq ft
- DAMAC Properties
- Project: Violet 3 Townhouses
- Area: DAMAC Hills 2
- Starting Price: AED 1.89 million
- Size: 4-bedroom townhouses from 3,100 sq ft
In contrast, apartment developments are more affordable to initiate, often requiring a minimum investment of AED 30-40 million for developers to purchase smaller plots and start construction. Many developers, including newer players, enter the market with apartment projects, leading to an oversupply.
Key Developers for Apartments:
- Emaar Properties
- Project: Altus
- Area: Creek Harbour
- Starting Price: AED 1,600,000
- Size: Studios from 665 sq ft
- Ellington Properties
- Project: Belgravia Heights I
- Area: Jumeirah Village Circle (JVC)
- Starting Price: AED 650,000
- Size: 1-bedroom apartments from 900 sq ft
- Imtiaz Developments
- Project: Beach Walk Residences by Imtiaz
- Area: Dubai Islands
- Starting Price: AED 1.9 million
- Size: 1-bedroom apartments from 880 sq ft
According to a recent report from JLL, the number of new apartment units launched in Dubai in the first half of 2024 reached over 22,000, while townhouse launches were limited to less than 5,000 units, reflecting the scarcity in the townhouse segment.
2. Higher Demand for Townhouses
While apartments are more widely available, there is a clear trend indicating a higher demand for townhouses, particularly among investors and end-users. The preference for townhouses is driven by several factors:
- More Privacy: Townhouses provide greater privacy and space compared to apartments.
- Land Ownership: With many townhouse purchases, buyers own the land, adding to the property’s value.
- Lifestyle Preferences: Buyers today are prioritizing spacious homes with private gardens, especially in family-friendly communities.
For instance, the recent launches of The Valley by Emaar and DAMAC Violet 3 Townhouses were met with strong investor interest, with 70% of the units sold out within the first few months. On the other hand, apartments, while affordable, face stiffer competition with developers continually releasing new projects.
3. Investment Leverage: Townhouses Hold the Power
Given the limited number of townhouse projects on the market, developers and sellers of townhouses maintain the upper hand. This is not the case with apartments, where oversupply is more common, leading to greater competition and pricing pressures.
In the townhouse segment, supply constraints combined with higher demand provide pricing power for both developers and investors. According to a report by Property Finder, the average price of a townhouse in Dubai increased by 8.5% in Q2 2024, compared to a 3% increase for apartments.
4. Longer Development Time for Townhouses
While townhouses are more attractive for investment, they require a longer construction timeline due to the complexity of developing large plots. This also contributes to the limited supply in the market. For instance, townhouse projects like Cherrywoods by Meraas and DAMAC Violet 3 Townhouses have longer handover timelines, ranging between 2-4 years.
In comparison, apartment developments in areas like Business Bay and Jumeirah Village Circle (JVC) can be completed in a shorter timeframe, making them more readily available in the market. However, this also increases the likelihood of oversupply, diluting the return potential.
5. Townhouses Offer Better Long-Term Appreciation
Investors in Dubai often prefer owning land due to its long-term appreciation potential. Townhouses, which come with land ownership, provide an additional layer of security and future value growth.
For example, Emaar’s Arabian Ranches 3 townhouse prices have appreciated by 12% since their launch in 2022. In contrast, apartments, which do not include land ownership, tend to experience slower appreciation, particularly in highly saturated markets.
6. End-User Preferences Favor Townhouses
End-users, particularly families, increasingly prefer townhouses for the privacy, space, and lifestyle they offer. Many of the townhouse developments in Dubai, such as Nad Al Sheba Gardens and Tilal Al Ghaf, cater to this growing demand by offering amenities like parks, swimming pools, and community centers.
According to a recent survey by YouGov, 75% of homebuyers in Dubai prefer townhouses for their next purchase, citing privacy, space, and ownership of land as their main reasons. This end-user preference is a significant factor in driving townhouse demand and sustaining high property values.
7. Townhouses vs Apartments: The Balanced Perspective
We are not disagreeing or dismissing the value of investing in apartments, as it depends on several factors like your inquiry, budget, and personal preferences. Apartments can be a good investment as well, especially for those looking for properties in more central areas or near popular spots. However, if your budget allows for AED 1.9 million, the DAMAC Violet 3 Townhouses at DAMAC Hills 2 could be a better option compared to many 3-bedroom apartments in the market. Similarly, if you have a budget of AED 2.48 million, The Valley by Emaar offers many advantages compared to most apartments in the market, especially considering location and lifestyle factors.
That said, location and personal priorities also play a role. Some buyers prefer to live in more central and happening areas, or near the sea, while others prioritize quiet, private spaces and more room to live. In such cases, townhouses are often a better fit.
For those seeking a partial personal-use investment and planning to rent out their property for the rest of the year (e.g., as a short-term rental or holiday home), apartments in central locations with easy access to Dubai’s iconic landmarks might be a better option.
8. Starting Prices and Sizes of Townhouses vs. Apartments
- Townhouses: The average starting price for a 3-bedroom townhouse is around AED 1.5 million, with sizes ranging between 2,000 to 3,000 sq ft. However, high-end townhouses like The Valley by Emaar start at AED 2.48 million, while Violet 3 Townhouses by DAMAC start at AED 1.89 million for a 4-bedroom unit.
- Apartments: A 1-bedroom apartment typically starts from AED 600,000, with sizes around 700 to 900 sq ft.
While apartments offer lower entry points for investors, the long-term returns and stability provided by townhouses make them a more prudent choice.
Conclusion: Townhouses – A Stronger Investment Choice
Considering the limited supply, growing demand, land ownership, and higher long-term value appreciation, townhouses clearly stand out as a better investment option in Dubai’s current real estate market. With fewer developers able to bring townhouse projects to the market, the limited availability creates a strong negotiating position for investors. For those looking for stable long-term gains, privacy, and family-oriented living spaces, townhouses offer unmatched potential.
While apartments remain a popular choice due to their affordability and faster development timelines, the oversupply risk makes them a more volatile investment. Townhouses, on the other hand, provide greater security, consistent demand, and long-term appreciation, making them the recommended choice for investors in 2024.
