As the prices of luxury villas in Dubai skyrocket, homeowners can make millions in profit by incorporating cinema rooms, steam rooms, and gyms into their home renovations.
Home renovations are proving to be a lucrative investment strategy, with property owners in some of Dubai’s most exclusive villa communities making millions in profit, experts told Arabian Business.
In the upscale villa community Al Barari, homeowners are reportedly earning premiums of up to 100 percent, or more than $10 million in profit, shortly after spending around $3 million on renovation costs, according to Ellie Street, Area Sales Manager at Maria Morris Real Estate.
These renovations go beyond simple upgrades. Villa owners are incorporating ultra-luxurious features such as cinema rooms, indoor and outdoor pools, gyms, steam rooms, spas, elevators, and even bowling alleys. These investments can add approximately $10 million to the property listing price if executed to high-quality standards.
“The refurbished homes feature exclusive interior and exterior designs that match or surpass new constructions in elegance and functionality,” Street told Arabian Business.
This trend is driven by soaring property prices for high-end luxury villas, as overseas demand for prime residences in the emirate remains strong. Since the start of 2024, prices for $10 million-plus homes in Dubai have increased at one of the fastest rates globally, with villa prices exceeding $560 per square foot on average for the first time in ten years, according to the Valustrat Price Index. Consequently, many property owners are opting for home renovations to cater to the demand for customized luxury living spaces.
“With significantly lower prices in Al Barari compared to other prime and super-prime communities, property buyers are investing more in their homes, attracted by the larger plot sizes,” said Street. Currently, 50 percent of their clients purchase properties with the intention of making substantial profits through renovation, a notable increase from a few years ago when only 20 percent of clients were doing so.
Similarly, areas such as The Lakes, Jumeirah Park, and Jumeirah Islands are experiencing an increase in home renovations. According to Cushman & Wakefield Core data, most of these districts have seen a year-on-year increase in sale prices of more than 20 percent.
“These villa districts have central locations with well-established schools and amenities as well as spacious layouts. Therefore, after upgrades, they can command and achieve substantial premiums,” said Prathyusha Gurrapu, Director and Head of Research and Consultancy at Cushman & Wakefield Core.
Renovations determine villa price points
In the quest for maximum returns, Dubai’s property experts have found that fully upgraded, turn-key villas provide the most profitable opportunities, regardless of whether the property is 10 years old or just two.
“What we find challenging is partial renovations,” said Street, adding, “[investors are] not willing to pay any premium for partial upgrades because they can get a standard villa unit for the same price. So, what we often see is that if you’re going to renovate [to add property value], it needs to be comprehensive.”
According to a new report by the global property consultancy Knight Frank, 57 percent of high-net-worth individuals (HNWI) purchasing property in Dubai this year prefer turn-key properties. These buyers are looking for fully renovated and furnished villas, as if they are “literally coming to the country and moving in straight away,” Street noted.
While pinpointing the exact value from a specific upgrade can be difficult, property owners can instead focus on identifying the renovations necessary to command premium prices based on previous listings.
According to Street, properties listed at $9-10 million should include large bedroom sizes, master suites with walk-in closets, a pool, and an office space. Properties listed over $11 million are expected to have a cinema room, while those listed over $12 million should feature amenities such as a gym, larger rooms, perhaps a lift, a wellness spa, and additional entertainment areas for families and guests.
Renovations also involve reconfiguring spaces and layouts to accommodate various lifestyles, with particular attention to kitchens, living areas, and bathrooms, where updated features not only enhance property value but also offer endless customization possibilities.
Renovation trends that add value to properties
Charu Gandhi, Founder and Director of design architect firm Elicyon, emphasizes that simply adding luxurious amenities is not sufficient to achieve a $20 million property sale.
Gandhi, whose expertise was crucial in the record-breaking $28 million sale of the One Palm penthouse and is currently designing the luxurious Tilal Al Ghaf residences project, advises prioritizing quality over quantity.
“Ultra-high-net-worth clients are exposed to numerous high-quality projects and can quickly discern if something is substandard,” Gandhi said. “So prioritizing quantity over quality is not advisable.”
As potential buyers become more particular about the appearance and stylish organization of spaces, Gandhi suggests that quality finishes often offer better value than simply adding features like a wellness spa.
“Typically, the best value-added enhancements are those that people can see and touch, such as high-quality door handles, lighting, and switches. Additionally, good acoustics, ensuring each room has sound insulation, can make a significant difference,” she added.
Sustainability and longevity are also increasingly important to HNWI buyers, according to Gandhi. “We are noticing that our clients are becoming more concerned with sustainability and want to know the origins of materials and their legacy,” she said.
This might involve specific materials sourced from rare regions or unique features that make the property stand out. She highlights that investments in tactile elements such as high-quality air conditioning and air filtration have contributed to the success of renovated properties.
Gandhi also advises incorporating flexibility throughout the property’s details, as many buyers seek these features.
Street added, “If the property is intended as an investment, it should appeal to a broad audience to avoid limiting the potential buyer pool.”
How much should a full renovation cost?
Renovating a home in Dubai can be quite costly. According to property experts, the expenses for a full house renovation include payments for construction and finishing materials, home styling—which covers necessary furniture, appliances, and decorative items—and labor costs.
Street noted that some clients have spent upwards of $4 million on high-end materials and finishes. However, with careful planning and the right expertise, costs can be managed more effectively.
“With knowledge of the right contractors and construction methods, homeowners might only need to spend between $500,000 to $800,000 and still achieve results that appear to cost $1.5-$2 million,” Street said, adding that renovation costs will vary based on plot size and materials used.
Despite thorough planning, industry experts mentioned that house renovation costs in Dubai will always exceed the general price in the residential real estate market.
“Renovating an apartment or villa in Dubai becomes more expensive every year,” said Anton Kaptur, Head of Project Management at Colife. He predicts the average cost of renovation will rise by another 10 percent in 2024.
“Prices for materials and labor increase in tandem with the market prices of apartments and villas,” Kaptur explained.
Industry professionals noted that not only have construction materials and furniture become more expensive, but contractors’ fees have also significantly increased recently.
“It’s crucial to dedicate time at the project’s start to understand your goals; otherwise, you risk setting it up for failure. Guidance from an expert on budget allocation and timing for significant contributions to the property is essential,” Gandhi added.
