Dubai real estate talks about appreciation constantly and barely acknowledges depreciation, even though physical depreciation is a certainty and market depreciation is a recurring event.
Depreciation is the decrease in a property’s value over time, driven by two different forces people tend to confuse. Physical depreciation is the ageing of the building — finishes dating, MEP systems wearing, facades weathering. Market depreciation is the broader price cycle — 2014-2020 Dubai was essentially flat or down in real terms across many secondary clusters.
Physical depreciation in the UAE is steeper than buyers expect because of sun, humidity, and dust. A Dubai Marina tower built in 2008 with original unit finishes trades at a structural discount to a 2022 Ellington tower next door, even before you factor in amenities and floor plans. Service-charge increases on older buildings accelerate the gap — owners association levies for facade repainting and chiller replacement can run AED 5-8/sqft above new stock.
A client last year was trying to decide between a AED 1.4M unit in an older Jumeirah Lakes Towers building and a AED 1.6M off-plan equivalent in JVC. Once we modelled the five-year service charge trajectory on the older one, the gap closed to under AED 40k.
Age shows up in the service charge before it shows up in the sticker.
Related: Appreciation, Service Charge, Holding Cost, Maintenance Fee.