Dubai: Despite the soft market conditions, Dubai, Abu Dhabi and Qatar still offer better yields on real estate investments than some of the mature investment destinations, going by a new report brought out by Al Masah Capital.
Even with the dollar’s current strength, which makes it costlier for emerging markets’ investors to pick up assets in dollar-pegged economies, the yields available can be compelling. Dubai’s current yields on apartments are in the range of 8 per cent, while for villas it would be 6 per cent. That puts Dubai above London’s 4 per cent, says the report.
“Additionally, it is supported by growing population and the rise in the expats coupled with the upcoming Expo in 2020,” the report adds.
As for Abu Dhabi, apartment rental yields could be “as high as 10 per cent”. A property law introduced in January 2016 has also made buying properties “more transparent”.
Doha, meanwhile, can offer yields as high as 9.1 per cent for properties within the city centre and 7.3 per cent in the suburbs.
“While some of this spending (on infrastructure and related projects) is likely to be scaled back, the majority of announced projects are likely to proceed,” the report adds. “Considering the need to prioritise government spending, projects revolving around these mega events (such as Expo 2020 and World Cup 2022 in Qatar) could suck in capital and resources at the expense of other projects.
Developers in Dubai, meanwhile, will be in two minds on what their sales strategy should be this year — aim for the overseas investor targeting upscale assets or stick with selling to domestic buyers through mid-market options.
“The UAE’s residential sector is undergoing rationalisation as the country witnesses another wave of job cuts within government, oil and gas and financial services sectors,” the Al Masah Capital report notes. “This has resulted in disposable incomes impacting the residential demand with existing residents looking for cheaper and smaller housing options.”