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Despite the difficulties Dubai rents and sales real estate market experienced throughout 2016, returns on investments in local housing sector are still of the world’s highest.
A recent report by Propertyfinder Group has revealed that the biggest rental yields are generated in the newest Dubai areas with the lowest rental rates. These are Sports City, Silicon Oasis and Discovery Gardens. However, the infrastructure in these communities is far from complete as the construction there is still ongoing and will end only in 5-10 years. But this does not prevent property owners in those areas to rent out their apartments at a low price and receive about 9% of rental yields, mainly due to the ratio between the low off-plan sales cost and current rents. To date, this is one of the highest rental yields rate in the world.
Midmarket Dubai districts in terms of rental yields, such as The Greens and JLT, are not too far behind with 7.5 – 8 per cents of annual rental return for apartments.
And finally, the most popular Dubai areas, where everybody wants to live, but not everyone can afford, namely Dubai Marina and the man-made island of Palm Jumeirah, now offer up to 6% of rental yields, which is also quite enough compared to the same-sized property rents in other world’s cities. Another Dubai’s central district of Downtown now provides about 5.5 per cent of rental income.
Most Dubai areas from the Propertyfinder’s top 20 most popular emirate’s locations saw property prices declined slightly in the sales segment this year, but not as dramatically, as often stated by other analysts. The decline was just between 2.4 to 3.3 per cent, maximum. At the same time, some areas, such as Downtown, used this decline in sales price to generate bigger rental yields.
On the other hand, if you are interested in medium- to long-term real estate capitalization, then affordable Dubai areas with the highest rental yields are not the best choice for tomorrow, for the cost of these apartments may probably decline due to a large number of new homes being delivered here. At the same time, rental increase has its ceiling too, for this kind of property is targeted at low-to-middle income workers, whose financial possibilities are limited as well.
Anyway, Dubai has numerous options for the world’s best investments in real estate, whether it be affordable flats or exclusive apartments. The choice is always yours.
