Redevelopment Trends in the Springs Villa Area

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Redevelopment trends in the Springs Villa area to watch in Dubai real estate market

Recently, there has been a lot of interest in new projects in Dubai real estate market, from Dubai Creek to DWC and Palm Jebel Ali. But today, instead of projects that are already widely advertised, I would like to introduce the redevelopment trend of the Springs area that is currently in full swing. The redevelopment I am talking about here is not the Korean-style new construction redevelopment, but the renovation of individual buildings, and it is a method that stands out for its investment value along with the increase in the value of the residential area.

History of Dubai's residential areas and the location of Springs

When I first came to Dubai about 20 years ago, Dubai was centered around the new city of Bur Dubai and the old city of Deira, with many commuters going to Jebel Ali, where new developments were just beginning. At that time, traffic in Dubai was like the daily commute home for Chuseok, and the numerous construction sites were filled with dust. There were no completed buildings to be seen, except for the World Trade Center at the beginning of Sheikh Zayed Road and a few Emirates Airlines crew quarters.

However, starting with Dubai Marina and JLT area, the Dubai government started developing residential towns such as Dubai Marina, Greens, Springs, Emirates Living to boost the development of Jebel Ali and the coastline area. One of the first areas to be completed in this development is Springs. Developed as the first standalone villa residential area in Dubai, Springs is still attracting a lot of interest from investors even now that the popularity of new luxury residential areas such as Dubai Hills and Sidra is soaring.

The unique charm and living environment of the Springs area

The Springs area is a family-friendly community with private parking and a great environment for children to ride bikes. As an independent community with parks and lakes around, it offers a comfortable and quiet living environment, resulting in high resident satisfaction. Especially during the Corona pandemic, the popularity of the Springs area began to rise again as the demand for Villa Communities with private gardens and walks increased rapidly rather than cramped apartments.

With the price of new villas skyrocketing in the past 2-3 years, the Springs area, which is still relatively cheap, is attracting the attention of many investors. With prices being about 40% cheaper than new villas completed less than 5 years ago, and boasting an excellent location with easy access to JLT, Marina, Jebel Ali, and schools, Springs is emerging as a practical investment alternative.

Investment Value Analysis of Springs Villa through Renovation

Over the past few years, savvy investors have been buying Springs villas at bargain prices and renovating them to create a satisfying living space. Seeing this, there are also increasing cases of real estate agents buying old villas, refurbishing the interiors, and then renting or reselling them for a similar price as the newly built Dubai Hills villas.

Currently the most popular 3M type (3beds, approx. 2,500 sq ft) in Springs, with a selling price of around AED 4.1 million to 4.4 million, depending on the location and access to the pool/park. Renovations require an extension permit (NOC) from Emaar, the developer of Springs, and the renovation cost is around AED 700 per sq ft. A typical extension for a 3M type costs around AED 115,000. For a more luxurious renovation, an average budget of AED 400,000 is required, which allows you to create a luxurious living space similar to a newly built villa with a total investment of AED 4.75 million, including the sale price. The currently renovated villas being traded are priced at AED 5.2 million to 5.4 million, so you can expect a profit of around 10-20% from the sale price when renovating.

Attractiveness from an investment and rental yield perspective

The investment appeal of Springs Villas is not only in terms of short-term capital gains but also in terms of rental income. Currently, the rental price of an old villa before renovation is around 220,000 dirhams, but after renovation, the villas are often contracted for a rental price of around 280,000 to 300,000 dirhams. This represents a rental yield of 5.5 to 6%, which is an attractive figure for both real buyers and investors.

Potential for joint investment with Springs as an alternative investment option

The Springs area is an attractive investment destination in terms of accessibility and convenience while being relatively cheaper than new villas. It is an ideal location for workers whose workplaces are in Jebel Ali or JLT, and if you want a new home but are worried about a new villa within 5 years, Springs can be a good alternative. In addition, investors who are hesitant to invest in apartments can also consider a safe way to realize profits through group purchase or group investment.

In this column, we introduce the redevelopment trends in the Springs area, which is less well-known than other areas but has high cost-effectiveness and investment value. We will come back with more useful information next time.