The Dubai rental property cycle generally lags the sales market by about 12-18 months. As such, today’s average asking rents are broadly equivalent to levels last seen in early 2013. The Real Estate Regulatory Agency’s updated rental index for this year reflects this cycle, with no significant change recorded for freehold rentals as compared to last year.
Research has shown that many landlords have indeed either reduced their lease values or offered incentives for their tenants to minimise vacancy levels. Nevertheless, even with the current scenario, Dubai’s real estate rental returns are still considered among the top in the region as well as on a global level.
Rather than reporting on general gross yields, which can be misleading as it takes no account of landlord outgoings, the ValuStrat Price Index focuses on calculating the net rental yields, which factor in the various expenses and income assumptions associated with a rental return by subtracting service charges, management fees, taxes and insurances from the rent, and assuming a reasonable 5 per cent vacancy period. This gives a far more accurate estimate of an investor’s likely annual return.
As of last month, the top Dubai locations with the highest net yields are as follows.
Discovery Gardens
One of Nakheel’s mid-affordable communities is anchoring itself in the top of the list with the highest estimated net yield of 6.13 per cent. Located close to Ibn
International City
An affordable master-planned community by Nakheel located northeast of the
Dubai Sports City apartments
An emerging mid-market community in Dubailand featuring the world-renowned
Remraam
Developed by Dubai Properties in the south-eastern outskirts of Dubailand with
Dubai Production City
An affordable community by Tecom, Dubai Production City has apartments
Haider Tuaima is head of real estate research at ValuStrat. The views expressed here are his own.
