If you consider buying real estate in the UAE with investment purposes, then you’ll have a few drastically different options. The first, quite reliable option, extremely popular among ultra-high net worth individuals (UHNWIs with more than USD 30 million) is buying elite property in iconic Dubai areas, especially villas on the manmade island of Palm Jumeirah. This option has a number of advantages, including that this property can serve you as your own beachfront second home. Rental yields for such units stand at around 7-11% pa.
This is considered one of the best rental rates globally. For comparison, the average rental income in Asian countries and cities, particularly in Hong Kong, India and Singapore ranges between 2.22 and 2.86%, and only London gives you the opportunity to earn up to 3.20% on leasing your property, as imexre.com has already reported.
However, researchers from Cluttons recently revealed that there is a certain real estate market segment in Dubai, where you can expect up to 20% of rental yields. These are affordable accommodations for expat workers in areas such as International City, Sports City. And even more prestigious options of residential property and offices in Discovery Gardens can guarantee an average of 9% of revenue, said Faisal Durrani, Head of Research at Cluttons.
This is also evidenced by the types of recorded transactions: many investors today are buying out the whole floors with affordable apartments in these areas in bulk deals. And it should be noted also, that such yields have a long-term potential for the years to come. A recent Zurich Global Life survey has shown that the average length of time expat employees stay employed in the UAE has increased from four years, seven months to six years, 10 months, an increase of 66 percent. Expats obviously tend to stay here, in Dubai for longer, and the city's population is growing, which has a positive impact on the rental yields.
27% of surveyed UHNWIs said they are willing to invest in Dubai real estate in the next ten years. And an April 2016 new report by Standard and Poor's even suggests that a long-awaited market stabilization is already here.
“We still believe that the lifting of geopolitical restrictions, such the sanctions on Russia and Iran, could strongly benefit the recovery of the UAE property market. This would open new investment flows into the regions' real estate markets and partly compensate for the softening demand from other countries,” the ratings agency said.