October 2021 Bluewaters Island Pricing Guide
“How do prices look in Bluewaters Island?” barked Marcus as soon as Felix finished the last bite of the sticky toffee pudding.
“It depends” responded Felix, our Chief Analytics Officer.
To help us understand better, Felix laid out the tables with the average market prices for all the 3 bedrooms, 2 bedrooms, and 1 bed.
To add context, he also included the price per square feet.
Price Comparison of 2-beds
Price Comparison of 1-bed
Price Comparison of 3-beds
The first thing we noticed about Bluewaters Island is that they don’t have studios. Nada. Zilch. Not even one studio in the entire community.
That’s a shocker.
‘Cause - until recently - that’s how developers sold cheaper units (at a higher price per square feet). Not here.
But price alone doesn’t tell the full story. Because you don’t know how they compare to other sea-facing, sea view and waterfront communities in Dubai.
That’s why Felix prepared the Price Comparison for Bluewaters vs. the Rest.
He prepared lots of tables and data. To show us where flats in Bluewaters Island fit. When compared to similar communities in Dubai.
For brevity, we’re going to use 2 bedrooms apartments as a reference. The other units behave in a similar fashion.
So, let’s see how 2-beds apartments compare. Filtered to those in the same price per square feet range as Bluewaters’. That’s AED 2,000-2,500/sq ft. This is to see how flat prices compare.
2-Beds Price Compare (2k-2.5k/sq ft range)
2-beds Price/sq ft Compare (2-5 mil range)
When you look at the second column (with blue shades) you can see units in Bluewaters Island are in the same price range as many similarly well located units. Such as Palm Island. Pearl Jumeirah and the likes.
All the apartments range between 2.6 mil and 3.9 mil. With Dream Palm on the Palm Island being an outlier. There, a 2-beds costs a whopping 5.6 mil AED. Almost double than similar flats in Bluewaters.
Price per square feet comparison
In the second table we continue the comparison by taking another point of view.
This time we’re checking how 2-beds within the same price range (2 mil - 5 mil AED) compare? This time we’re looking at how price per square feet compare.
Looking at the second column (with shades of green) you quickly notice how price/sq ft ranges wildly. When comparing the 7 most expensive + 7 least expensive. Prices go from as low as 865 AED/sq ft in Dubai Marina. To as high as 3,696 AED/sq ft on the World Islands.
Because Bluewaters is in the 7 most expensive price/sq ft in the 2mil - 5 mil price range we realized that Bluewaters is on the expensive side of price/sq ft.
Sure, it’s not the most expensive. Nor it is alone there. Sharing the spotlight with the likes of 1 JBR in Jumeirah Beach Residence, FIVE on the Palm Island, and the Address Harbour Point in Creek Harbour.
Which means that there are cheaper flats somewhere else. Of the same size too.
“That’s to be expected,” said Marcus.
A man-made island with only 10 mid rise buildings and the tallest Ferris wheel in the world wasn’t going to be cheap.
But it isn’t the most expensive priced property either. When compared to similarly premium locations.
Should you avoid buying in Bluewaters Island?
“This is totally inconclusive,” said Marcus slamming the table.
He’s right. After all, prices aren’t the best indicator of any property’s profitability. There are countless examples of people ‘buying cheap’ and losing money for years. And people ‘paying a premium’ and making money for decades.
In reality, prices are only one of the investment parameters.
A far more important aspect of property investment is earning profits.
After all, real estate investment is the act of buying cashflow. ← pay attention 'cause this is important.
Wise investors invest a little money to earn a lot of passive income.
That’s why the proper analysis of Bluewaters Island starts now. Starting from looking at and comparing Cash-on-Cash Returns and Profits. Even during a downturn.
Let’s start by comparing similar units based on Cash-on-Cash Returns. Or CCR for short. This is metric many investors swear by.
Below we’re looking at two scenarios. The cash-on-cash returns with a 75% Loan-to-Value. And the 50% LTV.
In the first case, investors pay 25% of the property value. And then take a mortgage for the remaining 75% of the property’s value. While in the 50% LTV scenario, investors pay 50% of the property's value. And take a mortgage for the remaining 50% of the property’s value.
Top 7/Last 7 CCR @ 75% LTV
Top 7/Last 7 CCR @ 50% LTV
At 75% LTV Bluewaters is a disaster. Out of the Top 7 and the Last 7 units, only very few units do OK. And only townhouses cross the 20% Cash-on-Cash Returns benchmark for investment.
The sea of red shades in the third column should scare away anyone looking to buy with a 25%/75% cash to mortgage ratio.
But - at 50% LTV - all the Top 7 flats cross 20% Cash-on-Cash Returns mark. Even the Last 7 units are profitable. With the lowest giving a 1% Cash-on-Cash Return. In fact, there are no red shades.
The green shades on the third column are a sure sign of a cash earning community.
Few apartments even reach 1.5 times the 20% CCR investment benchmark. That's 1.5 X the already great 20% CCR threshold. Meaning a 20% return on the cash invested. Where else do you get that, legally?
One unit even reaches an amazing 45% Cash-on-Cash Returns. That’s doubling the money in just two years.
Until now we’ve only looked at Bluewaters Island. Let’s go broader.
Cash-on-Cash Returns Showdown: Bluewaters vs. Seafront vs. Sea view apartments in Dubai.
For clarity, Felix has prepared two tables. The first one shows the Top 7 and Last 7 units based on Cash-on-Cash Returns. As you can see there are zero entries for Bluewaters Island.
Showing that the units there are not the best. Nor the worse. Definitely not as bad as The Opus in Business Bay or the Royal Atlantis on the Palm Island.
Top 7/Last 7 CCR in Duba
Top 7/Last 7 CCR (2-5 mil range)
In the second table, Felix shows the Top 7 and the Last 7 cash-on-cash returns. In the 2 mil - 5 mil range. To compare apples to apples.
Here Bluewaters has one entry in the Top 7 for Cash-on-Cash Returns.
That’s why for non-residents Bluewaters shines. Because it has one of the highest Cash-on-Cash Returns of similar properties in the whole of Dubai.
Because the UAE Central Bank has capped the Loan-to-Value rate at 50% for non-residents. In other words, non-residents can borrow up to 50% of the property’s value. And nothing more.
While UAE residents can go up to 75% of the property’s value. So they need less cash upfront. But they also get higher mortgage payments. So the profits go down. And with it, down goes the cash-on-cash returns.
The Most Profitable Square Foot in Dubai’s seafront
From now on, we'll stick to the 50% Loan-to-Value ratio. In the next tables, the data shows how profitable Bluewaters Island is.
Whether in absolute terms. Or profits made on each square foot of the flat. Which we check to compare better the units. A bit like the price/kilo used for fruits and vegetables. Profits/sq ft makes it easier to compare two units.
The first table shows the Top 15 most profitable sea-facing and seafront properties. As you can see Bluewaters has two entries. That shows how profitable Bluewaters is.
Most profitable flats in Dubai's seafront
Most profits per square feet.
In the second table, we have filtered the comparison to fit the 2 mil - 5 mil price range. Where Bluewaters Island DOMINATES.
Just look at the third column (the green shaded one). To see how Bluewaters Island has some of the most profitable square foot on Dubai’s seafront.
For clarity here’s how we calculate profits. We take the total yearly rent and then deduct two months of rent. And then we remove all mortgage payments.
Annual rent minus 2 months rent minus mortgage payments = gross profits.
Units in Bluewaters are Safe to Own.
“But what happens if rents DROP 20%?” interjected Omar Ali. Our resident Chief Risk Officer. His job is to look-out for the worst-case scenarios.
To outsiders, his job might look gloomy.
But to us and you, Omar Ali is a lifesaver. Because he makes sure that we don’t look only at today's performance. But go deeper by looking at various scenarios. Bad scenarios. Scary scenarios. Like a 20% rent drop.
Profits Top 7/Last 7 @ 20% DROP
Top 14 Profits/sq ft (2 mil-5 mil range)
The first table looks at the top 7 and bottom 7 flats in Bluewaters Island alone. The top flats are safe. While the bottom ones are not.
Wherever there’s red shows that flats are unprofitable in case of a 20% rent drop. They don’t make enough money to cover mortgage payments. Screwing up investors’ cash flow.
While the blue shades show flats that are profitable even during a downturn.
That’s why it’s important to speak to a Bluewaters expert. To get the necessary help in selecting profitable and safe properties. Even within the same community.
It’s important to seek help. To find flats that are safe and give happiness (because profits make people happy).
In the second table we expand the search for profits in a downturn. To all seafront, and water view properties. Showing the Top 15 for profit/sq ft in the 2 mil - 5 mil range.
In there, Bluewaters Island has three entries. Making Bluewaters Island one of the most profitable square feet in the whole of Dubai. Even during a downturn.
Meaning that many flats in Bluewaters are profitable. After covering mortgage payments. In full. Despite rent dropping by 20%.
Making flats in Bluewaters Island Safe to Own. ← pay attention because this is how wise investors protect their downside. And survive bad markets.
Because flats in Bluewaters produce enough cashflow to protect investors. Even during a downturn.
Buy in Bluewaters Island: Yes or Nay?
Since flats in Bluewaters Island are profitable, safe, and prestigious we do recommend buying flats in Bluewaters Island.
More so, since there won’t be any extra supply coming here. Because the island is pretty much developed.
That’s true for the entire area.
Except for the under-construction Dubai Harbour peninsula.
A strip of land filled with Miami style high-rise apartment buildings. Which we don’t expect to directly compete with Bluewaters.
Their market is different. Plus, as of today the flats there don’t perform as well.
While Bluewaters Island is more intimate. And the tallest Ferris Wheel in the world will attract many tourists.
With the potential of gaining even higher returns with short term lettings. Which will grow when Palm Jumeirah, Dubai Harbour, Bluewaters and the mainland are linked. By monorail, metro, tram, water and pedestrian bridges.
That’s when tourists and residents will be able to walk, ride a tram, metro or board a ferry. To and from each of these communities.
And let’s not forget the upcoming 1,100 berths marina and the Cruise Terminal. The modern 300,000 square feet luxury cruise terminals.
The present is profitable and the future is bright for Bluewaters Island.
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