Living in a town houses is becoming popular among couples and families, as well as investors, in Dubai. Affordable housing rates, low service charges, attractive returns, home and land ownership and ease of maintenance all make town houses an attractive purchase option. The rising demand has directed master developers to develop a good range of town houses within their projects.
Mario Volpi, chief sales officer of Kensington Luxury Real Estate Brokers, says town houses are popular because the built-up areas are larger than some independent villas. “Ground plus one is the most popular type as there is only one set of stairs as compared to G+2,” says Volpi. “The one-bedroom town houses in Jumeirah Village Triangle [JVT] offer returns of 7.5 per cent and, similarly, Springs return rates are approximately 7-7.5 per cent. Jumeirah Village Circle [JVC] and JVT offer a good selection of town houses, whereas Arabian Ranches 2 Mira, Akoya and Warsan in Dubailand are new projects that are about to be or have just been handed over.”
Mini cities
Fintan Flannelly, client manager at Exclusive Links Real Estate, says communities along Al Khalil Road such as Meydan, Dubai Hills, JVC, JVT and Jumeirah Golf Estates offer town houses at different price points. Along Al Quadra Road, there is Mudon and Mira, which have been delivered over the past 18 months. Flannelly says Arabella and Serena in Mudon have been popular among buyers since they were launched last year.
“Established town house developments like Springs, Arabian Ranches, JVC and JVT continue to be popular, while the new kids on the block, Mira, Nshama, Arabella and Serena in Dubailand have sold well where off-plan prices are attractive,” says Flannelly.
Attractive investment
Indian investor Akash Gandhi points out that a town house is a better choice than an apartment because of the size; apartments can go up to Dh1,000-Dh1,500 per square foot, while town houses are in the range of Dh600-Dh900. Also, a town house gives the buyer independent ownership of the land, so it’s suitable for a long-term investor. The maintenance charges are also much lower.
“I have rented the unit and returns are good,” says Akash Gandhi on a three-bedroom plus maid’s room town house her purchased in JVC in 2013. “I make a 9 per cent net return on investment [ROI] and with the current market price, it is still a 7 per cent net income, which is also attractive. Even if you are a finance buyer paying interest at 4.5-5 per cent, it is still a positive ROI, with the added possibility of capital appreciation.”
Market trends
Flannelly says investors typically have been dominant players in town house developments. “Now the developers are becoming more flexible in their payment plans that open off-plan at favourable prices to end users,” he says. “We are now seeing Dubai Properties [DP] offering 40-60 payment plans over three years with a 10 per cent down payment, and several other developers offering 25-75 payment plans in fast-developing areas like JVC with a construction timeline of 18 months.
“Investor’s driven by ROI pursue town houses with low service fees in proven locations, while investors looking for capital appreciation will look at proven developers in newer areas with good payment plans. The net ROI can vary from 6.2-8.75 per cent if you get in early with a good off-plan price. However, location is still paramount for end users who want better quality, more choices in floor plans and space.”
He notes that three-bedroom town houses are the most popular type. As far as off-plan is concerned, DP’s Serena and Arabella, with good payment plans, are attractive, says Flannelly. For those looking for variety, he points to JVC, which has one-, two-, three- and four-bedroom options over two and three floors, in a variety of styles from modern to Mediterranean and prices starting from Dh1.35 million to Dh3.1 million.
“I have recently seen a few town house projects in JVC that are pretty amazing regarding layout and finishes, and you have your elevator,” says Flannelly. He believes town houses offer less risk as an investment because of the strong demand from families, be it for rent or sale. Families are also less likely to change homes too often, while the service fees are also lower, he adds.
Unit options
Rajiv Ghanekar, senior real estate broker at Keller Williams Real Estate Dubai, says town houses are typically built in clusters of two to six units, with prices varying based on the positioning of the house, proximity to amenities and plot size.
“A middle unit is built on an average 2,250 sq ft of plot and offers around 600 sq ft of usable backyard space, while a corner unit is built on a 3,000-4,000 sq ft plot and can provide a huge usable back-side yard space of nearly 2,000 sq ft,” explains Ghanekar. “On average, the yearly outgoings on a three-bedroom plus maid’s room town house in established communities such as The Springs and Al Reem is between Dh6,000 and Dh10,000 per year, whereas it is Dh15,000-Dh25,000 for a three- to five-bedroom independent villa and approximate Dh35,000-Dh50,000 for a three-bedroom apartment.
“Thus, town houses are more realistic, easy to manage and offer huge savings in yearly outgoings.”
He also points out that the segment has generated a significant momentum since a number of affordable housing projects were announced in 2013. “Clients who invested in early 2013 in Emaar’s Mira Townhouses are today witnessing a 40-50 per cent capital appreciation and a rental return of close to 8 per cent net,” says Ghanekar. “While it is difficult to say whether a similar capital appreciation can be expected for the current off-plan offerings, but even then, these would make good investment purely from a rental yield perspective.
“I would estimate that a three-bedroom plus maid’s room town house purchased today at a price of circa Dh1.5 million, with an estimated completion of 2019-2020, would still rent at a conservative figure of Dh120,000 per annum. Take away Dh10,000 per year in community charges, the projected net return of Dh110,000 would be over 7 per cent. And, this is a good enough reason to invest in town houses.”
