x Abu Dhabi, UAESaturday 29 July 2017

Buy-to-let replaces flipping in Dubai property market

With price comparison graphic: Strong tenant demand in Dubai is creating attractive yields for buy-to-let investors, with returns trumping even those of central London. Areas of Abu Dhabi are also beating the UK's capital.

The Greens offers the best gross rental yields in the emirate, according to research from the property information group Reidin. Randi Sokoloff / The National
The Greens offers the best gross rental yields in the emirate, according to research from the property information group Reidin. Randi Sokoloff / The National

Strong tenant demand in the Dubai property market is creating attractive yields for buy-to-let investors, with current returns trumping even those of central London.

The Greens offers the best gross rental yields in the emirate, according to research from the property information group Reidin.

Apartments in the Emaar development are generating gross returns of 9.37 per cent, Jumeirah Lakes Towers 8.82 per cent and Discovery Gardens 8.63 per cent. The figures do not include the cost of service charges or maintenance fees, which vary widely and lower the actual return.

"The returning strength of the residential market is now likely to tempt some investors back into the fray," said Matthew Green, the head of research and consultancy at CBRE in Dubai.

But the window of opportunity for investors may be closing as rebounding sales prices for property in prime locations in the emirate limit rental returns.

The emirate's prime locations recorded more price increases last month, with mid-range villas such as in Arabian Ranches and Victory Heights surging 18.5 per cent compared with a year earlier, according to data from Cluttons.

Dubai apartments yield an average return of 8.44 per cent compared with villas, which are generating about 7.24 per cent.

"Dubai offers one of the best rental yields for residential property among peer cities across the globe," said Ahmet Kayhan, the chief executive of Reidin.

Last year a study of London residential yields conducted by Jones Lang LaSalle showed investing in centrally located property would generate returns of between 5 and 5.3 per cent - less than any of Dubai's top five locations on a like-for-like basis and discounting variations caused by service charges or maintenance fees. Abu Dhabi apartments are yielding about 8.22 per cent returns on rent, with villas generating returns of 7.9 per cent.

The capital's best gross rental yields are being achieved in Al Reef at 8.96 per cent, followed by Al Raha Beach at 8.83 per cent.

scronin@thenational.ae

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