Good news for real estate investors as UAE rental yields hold up despite softening market
Rental yields in Dubai and Abu Dhabi continue to offer investors globally competitive returns despite flattening prices, says a new report from Propertyfinder.
Jumeirah Village Circle, Discovery Gardens and International City are the three areas of Dubai offering the highest returns for apartments, with average yields of 9.20 percent (per square foot), 8.96 percent and 8.59 percent respectively in October last year – around 0.5 percent down on April returns recorded in April.
For villas, The Springs (6.04 percent), Jumeirah Village Circle (5.41 percent) and Dubai Land (7.26 percent) were the highest-yielding areas in Dubai, with the former and the latter actually enjoying small rises in yields over the April figures.
The Springs return is particularly encouraging considering that sales prices have declined by six percent over 2017.
In Abu Dhabi, Al Reef (8.53 percent) for apartments and Hydra Village (7.52 percent) for villas represented the best places for investors.
Yields tend to matter most to investors as it is about income rather than capital growth. When compared to other major cities around the world. London, for instance, offers investors rental yields of around 3.4 percent per square foot, while Tokyo’s returns are just 2.7 percent.
“Typically, smaller properties produce better rental yields than larger ones,” says Lukman Hajje, Chief Commercial Officer of Propertyfinder Group. “Apartments are better than villas, and studios are better than larger apartments, for example.”
“But also consider location. Newer, emerging communities offer better rental yields than more established communities. Newer cities offer higher rental yields than established cities,” he adds.