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Dubai's net yields hit 4-year high

08.10.2019
Dubai real estate investors today have the unique opportunity to choose their perfect property and bargain for the price.

In the last couple of months, Dubai has recorded the highest net return on rental property since the first quarter of 2015. According to the latest ValuStrat Price Index, the yields from villa rents throughout the city were on average 4.7%, while apartment net yields touched 6%.

The fact is that the real estate capital value in all Dubai areas is now decreasing faster than the cost of renting. In the second quarter of 2019, the ValuStrat Price Index in the real estate sector showed that the average Dubai annual rentals decreased by 10.6%, and the average capital value decreased by 11.5%. And when capital value decreases faster than rents, net yields will increase — this is the consistent pattern of the real estate market, experts say.

In the affordable real estate category, the demand for rental units is growing faster than in the commercial sector, since the main target group of the landlords renting out their properties — about 75% of the working foreign population — earn less than AED10,000. These people are looking for affordable apartment renta because they simply can’t afford to buy property. Affordable units in areas like International City, Discovery Gardens and Dubai Media Production Zone (IMPZ) are absorbed relatively quickly, resulting in high returns for investors.

For example, in International City, the net return was 8.2% in July this year, and for the same period last year, investors received here 7.5% of the net profit. At the same time, from July 2018 to July 2019, the capital values of real estate in this community decreased on average by 14.3%, and on an annualized basis — by 4.7%.

Nevertheless, not only affordable communities have witnessed an increase in net profit, but even middle and high-class communities have recorded an increase in rental yields this year. For example, The Greens, Jumeirah Village, and The Lakes are mid- and high-level communities where investors received a net rental return of 7.6%, 6.3%, and 6.8%, respectively, in July this year compared to income for the same period in 2018, when they received 5.8%, 5.4% and 5.8%, respectively, according to the ValuStrat Price Index.

And the average rentals in these communities, however, did not decrease to the same level, which led to an increase in yields. Another factor that had a positive effect on net yields is a reduction in service fees in many areas of the city.

Today, even the best, most sought after and fashionable communities offer a high level of return on investment for real estate in Dubai. For example, Palm Jumeirah offers a net income of 5.7%, and Downtown Dubai — 4.6%, which can be called a fairly high yields compared to international markets such as London, Paris, New York and Hong Kong, where investors receive yields of around 1-2%.

To always stay up to date with the latest analytics data and real estate prices in Dubai, subscribe to our newsletter using the form below. And in order to sell, lease or buy/ rent housing or commercial properties in Dubai, contact IMEX Real Estate. Our contacts:

Tel. in Dubai, UAE: +971 (50) 2528188 (Whatsapp, Viber, Telegram)

Toll Free Dubai: 800-IMEX (800-4639)

IMEX REAL ESTATE BROKER LLC, UAE

Office 2502, Marina Plaza, Dubai Marina, Dubai, UAE

Email: pm@IMEXre.com

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