‘Dubai realty offers the higher yields …’ has been the marketing theme developers with off-plan launches of high-end property have been putting out all through the recent launches. How valid is their contention?
“Average yields are generally higher here due to the (relative) low home ownership percentage and the transitory nature of Dubai population,” Robin Teh, country manager at Chestertons Mena, told Gulf News.
“Yields have started getting attractive (ever) since the market cooled and property values have corrected higher than the rents. Lower yields are a sign of overvalued property and signal correction in the market.
“Total yields increase if rental increases are higher than that in property values. However, in the last few years, both rentals are sales prices increased at an equal rate and yields had been falling. Both variables had seen steep rises until 2014.”
Locations such as Dubai Marina and Downtown Dubai have seen yield stabilisation due to the steep increase in property values between 2012 and early 2014. Average yields are now between 3-5%.
Across all property asset classes, net yields in Dubai average 7.1 per cent in the first three months of the year, according to Knight Frank. This is ‘indicative of the pent-up investor demand for well-let real estate in the emirate,’ it reports.