The new rental slab decree now effectively comes in place of the rent cap. But will this mean investors might think twice before committing to a property asset here as they have less manoeuvre space on setting rentals?
According to Robin Teh, country manager at Chesterton International, “Rental yields — which is a function of rental values over the capital (sales) value of a property — had dropped in Dubai over the past year due to significant increases in capital values. “However, a strong performance of the rental market over the last two quarters has improved yields slightly.”
According to its research conducted on freehold apartments in Dubai, those in Dubai Investments Park recorded the highest gross rental yields at about 11.2 per cent and Discovery Gardens followed close yielding 9.8 per cent.
The average gross yields in Dubai still remains higher compared with other global locations by averaging 7.9 per cent, primarily driven by expatriate demand for rental properties.
“We expect the yields to improve slightly as percentage growth rate of capital values stabilise to 8-10 per cent in 2014 from 25-30 per cent in 2013,” said Teh.
“Rental caps will keep a check on yields for tenanted properties, but new/fresh contracts will command higher yields.”
