Real estate investment in Dubai is expected to see continued growth, but not investments in flipping as it once became famous and died for, but buy to let investments as Dubai rental yields soar on a new rise in residential demand.
Almost all the reports coming out of Dubai for the last few months have been positive on prices with the consensus being that the market is now well past bottom and firmly in recovery mode. But according to new data rental yields are the big story as yields in the emirate surpass those of prime central London according to respected research group Reidin.
According to the report apartments in the Emaar development are yielding 9.37 per cent gross, Jumeirah Lakes Towers 8.82 per cent and Discovery Gardens 8.63 per cent – these figures do not include service charges etc.
The strength of the sector is confirmed by other sources including CBRE in Dubai. "The returning strength of the residential market is now likely to tempt some investors back into the fray," said Matthew Green the consultancy's head of research.
However, price increases threaten to close the window of opportunity on these exceptional leads, with prime locations seeing further price growth last month according to Cluttons. The firm reported price growth of 18.5% year on year on mid-range villas such as in Arabian Ranches and Victory Heights. That said, villas are yielding lower than apartments at 7.24% compared to 8.44% on average.
"Dubai offers one of the best rental yields for residential property among peer cities across the globe," said Ahmet Kayhan, the chief executive of Reidin.
According to Jones Lang La Salle centrally located properties in London yielded 5-5.3 per cent last year, which is well below Dubai's top locations like for like and of course counting in the fact that service charges are likely much higher in London.
- Thursday 12 July 2012