8 June 2017

Dubai: The Gate Keepers

Gated communities have become a popular phenomenon within cities for a cornucopia of factors that include safety, status, and amenities. These communities trade at a premium compared to their non-gated counterparts as can be witnessed in various countries around the world i.e. England, United States and South Africa. In the United States the popularity of gated communities has grown to the point, where gated developments account for roughly 11% of new housing supply.

Since the creation of freehold in Dubai, gated communities have proliferated across the city. In the villa housing stock, 37% of units are in gated freehold communities. The non-gated communities are predominately in leasehold areas such as Jumeirah, Al Wasl and Al Sufouh. Given the fact that freehold is still a relatively recent phenomenon, it is astonishing how gated communities have come to dominate the landscape of the city. This trend is likely to continue, making it likely that gate communities in Dubai will be a much higher percentage than in comparable first world cities.

In Dubai, the premium for freehold communities is synonymous with gated communities; where freehold buildings have come up in leasehold areas, rental and price rates have gone up.

This premia is expected to lead to a “gentrification” of communities as Dubai continues on its aggressive pace of urban development. Better zoning and master planned communities will be able to distinguish with higher per square footage rates as these preferences are baked into the price.

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