The Dubai property market once attracted speculators interested only in flipping their purchases for the maximum gain in the minimum time.
Now, as prices bottom out in the emirate, the bruised and battered sector is catching the eye of a different kind of investor.
The buoyant rental market in Dubai is creating attractive yields for buy-to-let owners, with current returns even trumping those of central London - one of the most established buy-to-let markets.
But the window of opportunity may be closing fast as rebounding prices eat into potential rent yields.
The emirate's prime locations recorded more price increases last month, with selling prices for mid-range villas such as those in Arabian Ranches and Victory Heights surging 18.5 per cent compared with a year earlier, according to data from Cluttons.
That represents the biggest year-on-year increase since the collapse of prices in late 2008.
"The returning strength of the residential market is now likely to tempt some investors back into the fray amid the emergence of more solid fundamentals and improving sentiment," says Matthew Green, the head of research and consultancy at CBRE in Dubai, "particularly with rental yields still more attractive than [in] many more mature marketplaces".
But analysts say the yields mask substantial differences in maintenance charges and service fees among developments.
These can have a big impact on the returns that buy-to-let investors can expect after other costs involved with owning a property in Dubai are deducted.
The Greens is offering the best gross rental yields in the emirate, with apartments generating annual returns of about 9.37 per cent, according to data from the property information group Reidin. Jumeirah Lakes Towers offers 8.82 per cent, followed by Discovery Gardens at 8.63 per cent.
With villa sales prices recovering more quickly than apartment prices in Dubai, for the buy-to-let investor, this has meant apartments offer better initial returns.
Dubai apartments yield an average return of 8.44 per cent compared with villas, which are generating about 7.24 per cent.
But would-be investors should look closely at service fees levied by master developers, which vary widely throughout Dubai and can make a big difference to potential profits.
Another factor to consider is the relatively broad range of selling prices being achieved for almost identical properties in some developments, which reflects the still muted volume of transactions.
"The level of service charges and the quality of property management currently varies greatly between buildings," says Craig Plumb, the regional head of research at Jones Lang LaSalle in Dubai. "These are two factors that investors will need to have more regard to in the future, as they will impact the ability to attract tenants and the level of rental yield that can be achieved."
Buy-to-let investors helped to drive up prices in the United Kingdom's property market during the past decade as many people bought investment homes and banks responded by tailoring mortgage products for such purchases.
It created fortunes for thousands of people who quickly amassed vast empires of terraced houses, among them the former Liverpool and England football player Robbie Fowler. Such was his renown as a landlord that during his appearances during his football career, fans sang "We all live in a Robbie Fowler house" to the tune of Yellow Submarine.
The chronic shortage of housing in London and other cities fuelled huge growth in the market, which by the end of 2010 had created 1.3 million buy-to-let mortgages worth about £152 billion (Dh864.89bn), according to the UK Council of Mortgage Lenders.
Last year, a study by Jones Lang LaSalle of London residential yields showed investing in centrally located property would generate returns of between 5 and 5.3 per cent - still 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.
The best-performing area in greater London was Forest Hill, which returned 7.68 per cent.
Investors are increasingly looking for alternative ways to grow their savings as central banks worldwide cut interest rates in an attempt to stimulate growth. Both the euro zone and China have announced fresh cuts in their benchmark lending rates in the past week.
The relatively young UAE freehold property sector has yet to develop a substantial buy-to-let market, with most purchases in the early days of Dubai's six-year property boom having been either speculative or owner-occupier driven.
That may be changing as the Dubai property sector enters a new phase, where selling prices and leases increasingly reflect underlying supply and demand.
"It has been less yield-driven than more mature markets overseas in the past," says Mr Plumb. "As the market matures, this situation may change, with more investors seeking to rent out their units on a long-term basis."
