Dubai real estate gaining 120 per cent ROI after crisis

14.03.2017

The return on investment in Dubai property market are best ever since the global crash: Reidin/GCP.

A new combined report by Reidin and Global Capital Partners (GCP) consultancies revealed that massive government investments in creation and expansion of Dubai's infrastructure, as well as awarding the city the right to host Expo 2020, the decade's landmark event, allowed the emirate to turn Dubai real estate into one of the most lucrative investment assets globally.

Global financial crisis caused by a collapse at the US mortgage market has brought global housing prices down by more than 50 per cent almost ten years ago, with no exception for Dubai. Many projects have been cancelled or delayed, but since then, the emirate has been able not only to regain pre-crisis ROI values at the property market, but to make it even higher allowing investors to get 120 per cent of return in the ten years ever since.

Dubai real estate investment yields formed by rental income and capital gains for ready-made and off-plan properties were the highest among world’s major cities, compared to only 75 per cent in London and 63 per cent in New York. Even precious metals underperformed Dubai real estate yields at the global investments market: gold has returned only 92 per cent in ten years, while silver gained just 36 per cent, mainly due to a decrease in demand for these assets.

As an investment asset, Dubai's real estate was inferior only to the riskier NASDAQ Composite portfolio, a set of the common stocks and similar securities of all 3,000 plus companies traded on the NASDAQ stock market. This index yielded highest returns of 138 per cent. After Dubai, Singapore was the closest to this indicator with its 126 percent of return on real estate assets. Experts note that such an increase in investment yields has become possible in Dubai mainly due to a constant increase in rental costs.

And the average, more habitual for perception, annual rate of return for real estate assets in Dubai, New York, Singapore and London was ranged at the level of 5 – 11 per cent, according to the Reidin/GCP report, with Dubai staying closer to the upper limit of 10 per cent average ROI for apartments, villas and houses.

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