Some of Dubai’s newer freehold districts are offering property investors among the highest yields in the world despite a difficult 2016 for the emirate’s rental and sales markets, according to a new report by Propertyfinder Group.
The report also revealed that apartments in most of propertyfinder’s top 20 Dubai neighbourhoods posted small sales price declines this year, including JBR (down 2.4 percent), Dubai Marina (down 2.8 percent) and Downtown (down 3.3 percent).
Silicon Oasis, Motor City and Business Bay made small gains in the same period, the report added.
Lukman Hajje, Propertyfinder Group chief commercial officer, said: “The Downtown price decline has helped improve the rental yield, which is looking sluggish compared to other apartment options.”
Downtown’s 5.5 percent yield contrasts with Dubai Marina and Palm Jumeirah, which both give over 6 percent, he added.
propertyfinder.ae’s data broadly showed Dubai’s cheaper freehold areas offer the biggest apartment yields – with midmarket districts such as The Greens and JLT generating yields of 7.5-8.1 percent, while the emirate’s “emerging” communities including Sports City, Silicon Oasis and Discovery Gardens providing yields of over 9 percent.
“These are world-leading rental yields but these communities are far from complete, with a large scale of development scheduled over the next 5-10 years,” said Hajje.
“More stock will come online, suitable for budget-conscious purchasers and renters but conversely, as the area becomes more developed it will offer more for both owners and renters.”
That buy-to-let investors achieve a better return in areas typically accommodating lower income workers indicates there is price floor for renting property in Dubai which does not necessarily track sales price movements, he added.
“The lower end emerging apartment communities saw signs of decline in for-sale properties as a large number of new and off-plan projects with completed stock in these areas entered the competition,” the report noted.
“However, these same communities are now offering rental yields of over 9 percent, which makes them very interesting to high yield seeking investors.”
Villas typically offer lower yields, although Arabian Ranches and The Springs outperform many apartment districts in providing yields of over 6.4 percent, roughly double the more exclusive neighbourhoods of Palm Jumeirah and Emirates Hills, the report added.
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