While funding in Dubai’s residential property market brings to mind luxury villas and penthouse apartments, an active report provides that reasonable apartments are recently providing the best returns on investments.
Morgan’s International Realty’s Dubai Real Estate Market Report Q1 2021 provides that apartments in Al Khail Heights, Discovery Gardens, and Remraam have all provided over 8 percent average gross investment yields.
Dubai Creek Harbour provided the minimum rental yield, at 4.37 percent, while high-profile communities like The Palm Jumeirah had a yield of 5.85 percent, Dubai Marina, 6.05 percent, Downtown Dubai, 5.66 percent; and Motor City, 7.56 percent.
All together, villas gave lower yields, with Dubai Sports City providing the maximum yield at 6.23 percent and luxury development Jumeirah Islands the minimum yield at 3.93 percent.
Some of the emirate’s best-known communities give higher yields: Arabian Ranches’ yield for villas was 5.44 percent; the Plam Jumeirah, 4.56 percent; Silicon Oasis, 5.26 percent; and Dubai Hills Estate, 4.66 percent.
Data from Morgan’s International Realty’s last report in Q4 2020 provided that rental yields were stable quarter-on-quarter, with the only major difference being a rise in apartment rental yields for Dubai Investment Park at 9.69 percent, compared with 7.7 percent in Q1 2021.
A healthy yield
Elias Hannoush, managing director of Morgan’s, said: “Four percent yield for a prime location property and six percent for a non-prime location property is considered a healthy yield. Some investors are trying to achieve above eight percent, but it is unsustainable.
“Although rentals have been falling for the past two years in Dubai, most Dubai communities are still achieving what’s considered to be a healthy yield.”
Hannoush said a draft law by Dubai Land Department, which seeks to impose a rent freeze for three years, would support yields in communities that are facing supply pressure.
“In some communities, rentals have started to recover, but this is minimal,” he said. “The main reason behind the [proposed] freeze is to keep rentals the same in communities that will have a lot of supply of new properties in the coming year and a half.”
On the business front, the report referred to ‘extensive growth in the overall Dubai property market performance’.
It showed an increment quarter-on-quarter at villa and townhouse costs, with the main three gainers being Emirates Living at 16%, The Villa at 14%, and Dubai Hills Estate and Jumeirah Golf Estate tied in the third spot at 12%.
Apartment deal costs in Culture Village expanded by 14%, Dubai Hills Estate eight percent, and City Walk and Jumeirah Beach Residence was in joint third place at six percent.