Dubai offers lucrative ROI despite rental slump: Propertyfnder

03.09.2017

According to Propertyfinder Group, return on investment in the UAE’a real estate still remains at one of the highest levels globally, despite a decline in rental rates.

In its recent report on the latest trends in the global real estate market, titled "Real Estate Trends 2017", Propertyfnder notes that the return on investment (ROI) in Dubai’s real estate stays at the highest level compared to global medium.

Having analyzed rental and sales prices for apartments and villas in 23 residential multi-storey complexes and 16 villas and townhouses communities of Dubai analysts concluded that buy-to-rent option in the emirate stays very attractive for international investors, despite a slight rental decrease that took place in Dubai from September 2016 to March 2017.

If you decide to buy an apartment on Palm Jumeirah in order to lease it, today you can count on 5.2% of yields, while the highest ROI is registered in Discovery Gardens area with it’s a 9.5 per cent yields for apartments. For villas, rental yields range from 3.1 per cent in the Emirates Hills to 6.5 per cent in Jumeirah Village Circle (JVC).

The report also says that peripheral areas of Dubai, which many investors avoid considering them to be too risky to invest in a buy-to-let scheme, still provide highest yields in the city. However, the percentage will be calculated on the basis of much lower rents in line with the comparably low sales prices for apartments in these locations. Of 10 such areas with per square meter prices below AED1,000, the lowest 7.9 per cent rate of return was registered in Motor City, which is, however, a fairly high return compared to the market’s average.

“Dubai continues to be a multi-tiered market where the most desirable locations offer the worst rental yields, while the best yields are found in emerging communities,” the Propertyfinder report said.

As for the rest, latest trends in the Dubai real estate market suggest that landlords are more willing to cut corners unlike with second market property sellers, which fact may indicate a certain decrease in demand amid an oversupply in rental sector.

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