Dubai Real Estate Report on Jumeirah Islands

Dubai’s property market has always been a center of attraction for global investors. Understanding Loan-to-Value (LTV) percentages, cash vs. mortgage transactions, and recent sales trends are critical factors to consider when investing. Here, we focus on the Jumeirah Islands, one of Dubai’s iconic residential communities, comparing data from the past few years.

Jumeirah Islands: An Overview

Jumeirah Islands is a picturesque residential community located in the heart of Dubai. Known for its luxury villas and artificial lakes, it offers residents a tranquil, secure environment paired with high-end facilities and entertainment options, ensuring a comfortable and convenient lifestyle.

Facilities

1. Community Center: At the heart of the Jumeirah Islands is its community center, which hosts a variety of facilities, such as a supermarket for daily groceries, a fitness center for health enthusiasts, and dining options for family outings.
2. Fitness Facilities: Health and fitness are catered for with well-equipped gyms, swimming pools, and jogging tracks. The community promotes a healthy, active lifestyle.
3. Landscaped Gardens and Parks: The community is renowned for its lush greenery, which includes landscaped gardens and parks, providing serene spots for relaxation and play areas for children.
4. Security: Jumeirah Islands provides round-the-clock security to ensure its residents’ safety and peace of mind.

Entertainment

1. Dining and Cafes: The community offers a variety of dining options, from casual cafes to fine dining restaurants, catering to a wide range of culinary preferences.
2. Water Activities: The artificial lakes are visually stunning and provide opportunities for water activities like kayaking and paddleboarding.
3. Proximity to Beaches and Marina: Jumeirah Islands is a short drive from some of Dubai’s best beaches and the vibrant Dubai Marina district, which hosts a range of entertainment and dining options.
4. Shopping: Nearby shopping destinations include Dubai Marina Mall and the Mall of the Emirates, offering a vast selection of shops, restaurants, and entertainment options like cinemas and family entertainment centers.
5. Golf Courses: For golf enthusiasts, the Montgomerie Golf Club and the Emirates Golf Club are a short drive away, offering world-class golfing facilities.

Understanding the LTV Percentages

In the real estate industry, the Loan-to-Value (LTV) ratio is crucial in understanding a property transaction’s financial risk. The LTV ratio is calculated by dividing the mortgage loan amount by the property’s appraised value. It is typically expressed as a percentage.

The LTV ratio allows lenders, such as banks or financial institutions, to evaluate the risk involved in lending. A higher LTV ratio typically indicates higher financial risk because a larger portion of the property’s value is financed through the loan. On the other hand, a lower LTV ratio indicates a lower risk as it means a larger portion of the property’s value is financed by the borrower’s own money, i.e., the down payment.

In the case of the LTV percentages provided for various communities in Dubai:

• Arabian Ranches: 72%
• Arabian Ranches 2: 75%
• Downtown Dubai: 75%
• Dubai Hills: 71%
• Dubai Marina: 76%
• Green Community: 81%
• Jumeirah Beach Residences: 73%
• Jumeirah Golf Estates: 77%
• Jumeirah Islands: 62%
• Jumeirah Park: 77%
• Palm Jumeirah: 76%
• The Lakes: 72%
• The Meadows: 76%
• The Springs: 77%
• Victory Heights: 75%

These percentages mean that, on average, the listed percentage of the property’s value in each community is financed through a loan. For instance, 72% of a property’s value in Arabian Ranches is typically financed through a loan, with the remaining 28% being the down payment.

However, it’s noteworthy that Jumeirah Islands has one of the lowest LTV percentages at 62%. It implies that borrowers in this community typically finance less of their property’s value through loans, hence a lower financial risk from the lenders’ perspective. That could result in more favorable mortgage terms for borrowers in this community.

Mortgage vs. Cash Transactions

Mortgage versus cash transactions refers to how property purchases are financed in the real estate market. These transactions significantly influence market dynamics and can offer insights into the financial behavior of buyers in different areas.

A mortgage transaction is when a buyer borrows money from a lender (typically a bank) to purchase a property and then repays the loan with interest over a predetermined period. The property serves as collateral for the loan. If the borrower fails to meet the repayment terms, the lender can seize the property through foreclosure.

A cash transaction, on the other hand, is when a buyer purchases the property outright without the need for a mortgage loan. Cash buyers typically have sufficient funds to cover the full purchase price of the property.

Looking at the provided data for different communities in Dubai:

• For Jumeirah Islands, 60% of property purchases were made with cash, and 40% were financed with mortgages.
• In Jumeirah Golf Estates, the highest % of property purchases were made, with mortgages at 85%, while 15% were cash transactions.
• The highest percentage of cash transactions was in Victory Heights at 72%, with 28% financed through mortgages.

The preference for cash or mortgage transactions can indicate various factors, such as buyers’ financial capabilities in a particular area, market confidence, interest rates, and the overall health of the economy. For instance, a higher percentage of cash transactions could suggest that buyers in that area have substantial financial resources. A higher percentage of mortgages could indicate a reliance on borrowed capital to finance property purchases.

Trailing 6 Months Rental Transactions

The trailing 6-month rental transactions provide a snapshot of rental activity in a specific period, showing the total number of transactions and new contracts and renewals. This data is particularly useful for understanding trends in the rental market, including demand for properties and tenants’ willingness to renew their leases.

Based on the data provided for Jumeirah Islands, the rental transactions for the six months from December 2022 to May 2023 are as follows:

• December: Total transactions 63 (New contracts 30, Renewals 33)
• January: Total transactions 62 (New contracts 21, Renewals 41)
• February: Total transactions 52 (New contracts 13, Renewals 39)
• March: Total transactions 52 (New contracts 28, Renewals 24)
• April: Total transactions 44 (New contracts 16, Renewals 28)
• May: Total transactions 49 (New contracts 23, Renewals 26)

Over this period, there were a total of 270 transactions. Of these, 121 were new contracts, and 149 were renewals.

This data suggests several things about the rental market in Jumeirah Islands:

1. A fairly high volume of transactions indicates a healthy level of demand for rental properties in this community.
2. The fact that there are more renewals than new contracts may suggest tenant satisfaction with their current properties and a stable community.
3. While there is some fluctuation in the numbers month to month, there is no drastic drop or rise in the total transactions, suggesting relative stability in the rental market over this period.

Recent Transactions in Jumeirah Islands

Ten property transfers were recently registered at the Dubai Land Department in Jumeirah Islands. The highest transfer was a 4-bedroom villa in Cluster 35 that sold for AED 22,100,000, while the lowest was a 4-bedroom villa in the same cluster that sold for AED 11,500,000. The average sales price in the community is currently AED 14,325,000, with an average price per sq. ft of AED 2,710.

Properties for Sale

Several properties are currently listed for sale in Jumeirah Islands, including a 5-bedroom villa with a maid’s room, plot size of 8,801 sq. ft., and garage converted, listed for AED 13,499,950. Another attractive option is a 4-bedroom villa with a study and maid’s room, full lake and community views, fully upgraded and extended with a massive plot size of 10,636 sq. ft, listed for AED 17,799,950.

Conclusion

As one of Dubai’s most sought-after communities, Jumeirah Islands offers an idyllic residential experience. The data provides valuable insight into property values, transaction types, and market activity in the community, helping potential buyers and investors make informed decisions. The low LTV percentage in Jumeirah Islands is also worth noting, a promising indicator for those considering a mortgage. Working with a reputable real estate agent or professional is advisable when considering any property transactions.