While Dubai rental prices going down, rental yields going up

The paradox of rising rental prices in parallel with the growth of rental yields is explained in a newest Bayut report.

The average rate of return on the Dubai apartments lease sector stands at about 6.5% at the moment, a new report from Bayut research firm reveals.

Rental prices are down in almost all categories, and today it is possible to rent a studio apartment in the ‘future city’ for just about USD 15,518 per annum, which was only a dream a couple of months ago. On average, Dubai rental prices are becoming more affordable falling by 2% in July.

However, this does not mean reduced yields for landlords, otherwise they would just hold prices and take on a wait-and-see strategy. It's all about the market supply with affordable housing, which allows well-situated investors to buy at a budget rate and bring affordable new units to the rental market, ensuring themselves a consistently high annual rental income of about 6.5 per cent, one of the highest in the world.

The overall picture of apartment rental changes in Dubai at the moment looks like this:

  • One-bedroom apartments can be rented for an average of AED 92,000 (USD 25,000) per annum;
  • Two-bedroom apartments are leased at an average of AED 145,000 (USD 39,500) per annum.
  • While three-bedroom apartments are still rented out at an average of AED 206,000 (USD 56,100) pa,
  • Four plus bedrooms have returned to their H1 rental prices at an average of AED 304,000 (USD 82,800) per year rent.

Bayut experts commented on the Dubai rental market current situation: "At a time of general global slowdown, the performance of UAE's realty market continues to inspire trust in investors. Both Dubai and Abu Dhabi continue to be safe havens for global realty investors. Though rents have seen periodic adjustments, the UAE's unique selling propositions such as a highly smart, diversifying economy, security of investment and the great promise of Expo 2020 will keep the real estate and its allied sectors thriving in the months to come."

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