Property market analysis

"This building is already five years old!" Why is Dubai afraid of older property?

Why can a flat in a 1938 building be considered a lucky find in Italy, while in Dubai buyers often refuse even to look at a home in a ten-year-old building? And is a new flat really better than an older one by as much as it costs more?

A building from 1938

A few years ago I worked in Sardinia. I came to Italy for several months a year, worked in real estate, and one day got talking to a local lawyer.

He told me he had spent a long time looking for the right flat and had finally found exactly what he wanted. He was especially pleased with the building he had bought it in.

"What year was the building built?" I asked.

"1938," he answered proudly. "After the war, they didn't build like that any more."

That short conversation stayed with me.

For him, the age of the building was not a drawback but a virtue. He was looking for a certain quality of construction, architecture, layout and atmosphere typical of buildings from that era.

Of course, not every old Italian building has these qualities. But the approach itself struck me as interesting.

Later, working in Dubai, I remembered that conversation many times.

Here you often hear the exact opposite:

"What? This building is already ten years old? Why buy such an old flat?"

And every time I want to ask back: what exactly happened to this building in ten years? Why did it automatically become worse?

The cult of newness

Dubai's modern residential market is relatively young. Large-scale construction of privately owned homes started here much later than the markets of most European cities took shape.

Together with the city's rapid growth, a particular way of looking at property developed.

A new project is considered more attractive almost by default than a ready home in the building next door.

New architecture, a new lobby, new amenities, new design, new technology.

All of this can certainly have value.

But developers are interested in selling new units, so it is only natural that newness becomes one of the main arguments of their marketing.

Gradually this commercial argument starts to be seen as an objective measure of quality.

A new building is good. An old one, not so much.

Yet in reality there is no such clear-cut link between a building's age and how good it is to live in.

In Moscow, for example, there is steady demand for so-called "stalinki", Stalin-era buildings. Buyers deliberately choose them for their high ceilings, layouts, architecture and locations.

In European cities, buildings a hundred years old or more can be among the most sought-after property.

Of course, in such cases the technical condition, maintenance, quality of renovation and historical value play a huge role.

But the mere fact that a property ages does not automatically make it less suitable for comfortable living.

A good building does not stop being good just because a new one has been built next door.

An advantage a new build does not have

Ready property has one important quality that is rarely discussed in sales presentations.

It has already been tested by use.

If a building is fifteen years old, you can find out in some detail how well it was built.

You can assess the air conditioning, the condition of the facade, waterproofing, lifts, parking and common areas.

You can see how well the management company works, how quickly problems are fixed, what the building costs to maintain and what issues owners face.

You can talk to the people who actually live there.

When you buy off-plan, much of this information is not available.

The buyer sees project documents, renderings and the developer's promises.

The finished result may turn out to be excellent.

But until construction is complete, there is no way to check this fully.

This creates an interesting paradox: a ready building may have far more predictable qualities than a new one, yet it is the new one buyers are often asked to pay significantly more for.

April 2024. An exam no one expected

On 16 April 2024 extraordinary rains hit the UAE. According to the National Centre of Meteorology, the country saw the heaviest rainfall since systematic records began in 1949.

Some areas received more than 250 millimetres of rain in a single day. Roads were flooded, traffic was disrupted, and residential buildings and infrastructure were damaged.

For the property market it was an unexpected test.

And a test not of advertised construction quality, but of the real resilience of buildings and engineering infrastructure.

In some places underground car parks flooded. In others water got into homes, and there were problems with drainage, waterproofing and building systems.

Of course, the consequences depended not only on construction quality but also on terrain, the building's location, the state of city infrastructure and other factors.

But for residents it was a very practical test.

I, for example, live in a low-rise building that is relatively old by Dubai standards.

And during that very downpour, our underground car park did not flood.

I am not saying this automatically makes our building better than others. But I got very specific information about how it behaves in an extreme situation.

Now I know this not from a brochure and not from a developer's sales representative.

I saw the result with my own eyes.

To me, that matters.

A building's track record is also part of its value. Sometimes a very significant part.

And that track record is built not only in emergencies.

It includes ordinary everyday things: the quality of service, how reliably the building systems work, the condition of common areas, how quiet it is and how comfortable it is to live in.

Things you cannot judge from beautiful renderings alone.

Four floors versus sixty

There is another side to the question that is hard to reduce to a price per square foot.

It is a way of life.

Personally, I much prefer small low-rise residential communities.

Our building has only four floors, a spacious courtyard, a large pool and relatively few neighbours.

Many people know each other. It feels like a small community rather than an endless flow of people.

I like this kind of environment.

It has a certain privacy, calm and human scale.

Of course, high-rise buildings have their own advantages: panoramic views, extensive facilities, beautiful public spaces, and sometimes a truly exceptional level of service.

But high-rise living is not a universal standard of comfort.

Many neighbours, busy common areas, waiting for lifts, a constant turnover of residents: for some these are minor details, for others real drawbacks.

And in an emergency, having to walk down from the sixtieth floor by the stairs is hardly an advantage either.

The point is not that low-rise buildings are better than high-rises.

The point is that they are two different ways of living.

And buyers should choose the one that really suits them, not the one that is being advertised most actively today.

Comfort is defined not by the number of floors or an impressive lobby, but by how well a home fits the habits and needs of a particular person.

How much are five years worth?

Recently my wife and I started thinking about buying our own flat.

We have been renting in Dubai for several years and in that time have got to know not only the area but the specific building very well.

We looked at alternatives and compared layouts, prices, building ages, facilities and how the buildings perform.

And we found something interesting.

To buy a flat in a newer building of a comparable class, we would have had to increase our budget substantially.

Sometimes the price difference reached 50–80%.

What would we get for that extra money?

In some cases, a building three to five years younger, slightly more modern finishes and perhaps an extra bathroom.

But no fundamental change in quality of life.

No new location. No completely different type of home. No advantages that would really matter to us.

So a perfectly natural question arose: why pay so much more?

It is a completely different matter if you are moving to a unique residence with a private beach, a fundamentally different level of service, exceptional architecture or location.

A purchase like that can have a perfectly understandable logic.

The buyer pays for a real step up into a different segment of the market.

But when a flat in the building next door costs significantly more mainly because the building is younger, the economic sense of the decision is no longer so obvious.

Especially if you are happy with everything in your current building.

Not every difference in price means a matching difference in quality of life.

Interest-free instalments. Is waiting free?

One of the most effective marketing tools in the Dubai market is the developer's interest-free payment plan.

The buyer is offered an off-plan flat and pays for it gradually.

No bank loan. No interest.

At first glance, a great opportunity.

But one significant cost is often missing from these calculations.

While the flat is being built, the buyer needs somewhere to live.

Suppose a new one-bedroom flat costs AED 1.25 million.

Handover is planned in three years.

The buyer keeps renting a home for AED 100,000 a year.

Over three years he will spend AED 300,000 on rent.

If construction is delayed by another year, AED 400,000.

This does not mean the flat cost him AED 1.65 million instead of AED 1.25 million. Rent pays for a real service, a place to live, and the owner of a ready flat also bears the costs of maintaining it.

But when comparing two investment strategies, these cash flows cannot be ignored.

One buyer purchases a ready home and starts using it straight away.

The other signs a contract for an off-plan unit and keeps paying rent until handover.

Meanwhile, the money paid to the developer can no longer be used freely for other purposes.

And here another factor comes in: the opportunity cost of capital.

Money tied up in construction could be working in another asset or be used to buy a ready home.

Of course, a payment plan also has a real financial advantage: the buyer does not have to pay the full amount at once, and payments are spread over time.

So a fair comparison has to take into account the payment schedule, the cost of capital, rent, possible income from a ready property and the risk of delays.

The absence of interest alone does not mean the payment plan is economically free.

The cost of waiting exists even when it is not listed as a separate line in the contract.

Why does the future sometimes cost more than the present?

In the Dubai market you can find situations where a flat in a building under construction costs more than a comparable flat in a completed one.

Sometimes much more.

In some cases this is perfectly understandable.

A new project may offer better architecture, modern building systems, better energy efficiency, more practical layouts or a fundamentally different level of facilities.

But what if these advantages are relatively small?

Why, then, does a future flat cost more than an existing one you can use today?

Part of the answer lies in market psychology.

The buyer is sold not only property but also the expectation of its future value.

A new project is associated with rising prices, modern architecture and appeal to the next buyer.

A ready home is seen as a finished product whose potential is supposedly limited.

Yet in reality the investment value of property is not determined by age alone.

It depends on location, construction quality, the building's condition, demand from tenants and buyers, maintenance costs, competing supply and many other factors.

What is more, a ready property may have an important advantage: it can already earn rental income.

An off-plan unit cannot, not yet.

So a higher off-plan price needs to be justified, not accepted as a natural consequence of newness.

Dubai is growing up. So is its housing stock

There is one more thing I find particularly interesting.

Dubai is gradually turning from a city of constant construction into a city with its own residential history.

Communities built ten, fifteen and twenty years ago already form a mature housing stock.

Some of them are ageing badly.

Other buildings have problems with building systems, management and maintenance.

But there are also buildings that keep their qualities very well.

Their grounds become greener. Facilities grow around them. Neighbours get to know each other. Areas develop their own character.

With age, the real strengths and weaknesses of a particular building become clearer.

In some cases this creates additional value.

Of course, an older home needs a careful technical inspection.

The condition of the air conditioning, waterproofing, water supply, lifts and facades, and the financial position of the owners' association, are especially important.

You need to understand what major repair costs may arise in the coming years.

But these risks can be analysed.

And the more mature the market becomes, the less reason there is to judge a home by its year of construction alone.

Perhaps over time Dubai will see steady demand for specific buildings valued not for their newness but for their quality, layouts, architecture, atmosphere and proven reputation.

As happens in many other cities around the world.

A home is not a smartphone

We live in a world where newness itself has become a consumer value.

Every year manufacturers offer new cars, phones and appliances.

Previous models gradually come to be seen as outdated, even if they do their job perfectly well.

But property is not a smartphone.

A well-built and properly maintained building is designed to last for decades.

Its value is determined by how well it performs its main function: providing a comfortable, safe and convenient life.

A good layout does not become bad after five years.

A convenient location does not lose its advantages because a new building appears next door.

And well-kept grounds and an established community of residents can, on the contrary, become more attractive over time.

That is why, when choosing a flat, I would suggest starting not with the year of construction.

But with the question: how good will it be to live here?

And only after that assessing the building's age, its running costs, its technical condition and the purchase price.

In place of a conclusion

I sometimes remember that Italian lawyer who talked so happily about his flat in a 1938 building.

He found exactly what he was looking for.

And he did not consider the building's age a drawback at all.

Perhaps the Dubai market simply needs time to go through a similar stage of growing up.

So that buyers learn to assess not only a developer's promises but also the existing strengths of ready homes.

So that a building's age stops being automatically seen as a drawback, and newness as a guarantee of quality.

So that the price difference between new and older buildings is explained by real advantages, not just by the completion date.

I am not at all calling for people to give up on new builds.

On the contrary, good new projects are essential for the city. They move architecture, technology and living standards forward.

But buying property is too serious a decision to be guided only by the urge to buy something newer.

A good flat does not become bad just because someone has already lived in it. And a new building does not become good just because it has not been built yet.

This article reflects the author's professional opinion. Financial examples are illustrative and do not constitute individual investment advice.

The author's opinion. Not investment advice.