Dubai has been rated the third most affordable city in the world for purchasing prime residential property.
The emirate is behind Cape Town and Kuala Lumpur, according to the Savills World Cities Prime Residential Index for the first half of 2019.
While in-house Savills research into prime residential rental yields, highlight Dubai as the fourth best global hub for returns on investment (4.6 percent).
The report reveals prime prices in Dubai have fallen almost 20 percent in the last five years, due to high levels of new build stock and global economic uncertainty. In the last six months, prices fell by 1.9 percent.
According to the figures, the average price per sq ft of a prime residential property in Dubai is $600. This compares to $330 per sq ft in Cape Town and $260 per sq ft in Kuala Lumpar.
Swapnil Pillai, associate, research Middle East, Savills, said: “It is a good opportunity for domestic and foreign investors to look at Dubai. Firstly, because the time is right as it is far more affordable to purchase prime residential property now due to lower transactional costs and overall lower prices when compared to other major cities. Investors are paying less for top class specifications. Secondly, strong rental yields mean that long-term investors could generate robust annual returns when letting out property in the city.”
“It is transparent that capital values in Dubai have not grown at the same rate as other global destinations over the past 10 years [decreased by 1.7 percent], but that is not to say that the next 10 years will mirror this.
“In Dubai, demand is still strong; however, a mismatch of supply and demand has compressed prices. As supply/demand balances out over time, prices will adjust accordingly, so investment towards the bottom of the cycle could be a shrewd move.”
At the upper end of the scale, the most expensive property is Hong Kong ($4,730 per sq ft), which saw growth of 1.3 percent in H1; and New York ($2,520 per sq ft), despite witnessing a decline of 1.8 percent.
Prices in London, a popular investment hub for Middle East investors, dropped by 1 percent since the start of the year.
Savills World Cities Prime Residential Index - capital values price per square foot and price movements in local currency – cities ranked by half year growth
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