UAE properties provide higher rental yields than New York, London and Hong Kong

Dubai properties offer rental yields of 7% – higher than its international counterparts

In the first half of 2020, demand has increased for established family-friendly neighbourhoods in Dubai, as per the combined data released by Bayut and dubizzle. Antonie Robertson / The National

UAE properties continued to provide high rental yields despite sales prices and rents softening in the first half of the year, according to a report by real estate listings portal Property Finder.

Dubai properties consistently offer rental yields of more than 7 percent on average, which compares favourably with other major cities. Average rental yields in New York stand at 2.9 per cent, London 2.7 per cent, Singapore 2.5 per cent and Hong Kong 2.4 per cent.

“Despite a sustained contraction in prices, Dubai still holds its own as an investment hot spot with attractive yields and new legislative initiatives to further entice investors and companies,” Lynnette Abad, director of data & research at Property Finder, said in a statement on Tuesday.

“Since the change in UAE regulations regarding short-term lettings, we have seen a rapid increase in popularity with single and portfolio landlords alike," said Nick Witty, managing director of Chestertons Mena.

"With increasing demand for short-term lets and holiday homes, particularly in the run up to Expo 2020, these types of lets are achieving between 25 per cent and 40 per cent higher returns when compared with traditional longer-term leases."

Craig Plumb, head of research, Mena at JLL said residential yields in Dubai have remained largely unchanged at 6.5 per cent to 7 per cent over the past 12 months.

"The higher yields in Dubai compared to more established markets such as London, New York and Singapore reflects the additional risks involved in Dubai, where vacancies levels are higher," he told The National.

Dubai Silicon Oasis apartments provided the highest gross rental returns in Dubai at 9.5 per cent in the first half of the year, compared to 9.2 per cent a year ago.

New communities such as Meydan and Damac Hills also offered gross rental yields at 9.3 per  cent and 8.9 per cent, respectively.

Rental yields are calculated by taking a property's rental income and dividing it by the purchase price. Landlords usually achieve higher rental yields from apartments than villas and make more profit by renting studios than large apartments.

Established communities that continue to offer compelling returns for buyers include International City and Dubai Sports City, both of which offer gross rental yields of 8.4 per cent, and International Media Production City and Arjan, both at 7.6 per  cent, the report said.
Among villa and townhouse communities in Dubai, Town Square offered the highest gross returns followed by The Springs Reem – Mira, among others.

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Does this Dh9.95m JBR penthouse have Dubai's best views?

The view out on to the Arabian Gulf with Bluewaters Island to the left and Palm Jumeirah to the right. Courtesy LuxuryProperty.com

The terrace is big enough for a tea party. Courtesy LuxuryProperty.com

The side view encompasses other towers at JBR and Dubai Marina. Courtesy LuxuryProperty.com

The interior is minimalist and clean. Courtesy LuxuryProperty.com

The apartment comes with a very modern kitchen. Courtesy LuxuryProperty.com

Hardwood flooring has been installed as part of an upgrade. Courtesy LuxuryProperty.com

It comes with five bedrooms. Courtesy LuxuryProperty.com

Natural light fills the dining area. Courtesy LuxuryProperty.com

A breakfast bar is a convenient addition. Courtesy LuxuryProperty.com

An overview of the JBR area. Twitter / Dubai Media Office

JBR as seen from the beach. Stephen Lock / The National

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In Abu Dhabi, Al Reef leads in terms of gross rental yields for both apartments and villas or townhouses – at 8.5 per cent and 6.7 per cent, respectively.

Apartments in Al Ghadeer come second, with rental yields of 8.3 per cent , and Al Raha Beach at 7.2 per cent. Villas and townhouses in Al Raha Gardens, as well as Golf Gardens, are also popular with those looking to secure rental income.
The report also highlighted rental returns in Northern Emirates, with apartments in Ajman's Emirates City providing the UAE's best gross rental yield at 11 per cent and Ajman Downtown offering 8 per cent. Al Hamra Village in Ras Al Khaimah also provided apartment buyers with robust rental returns at 9 per cent, the report said.

The UAE property market has slowed in the wake of a drop in oil prices, as well as ongoing concerns about an oversupply of properties. Experts have forecast a recovery in Abu Dhabi, however, on the back of a new immigration regime offering long term visa for investors, the Dh50 billion Ghadan 21 initiative and changes to the emirate's freehold property law.