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Rental yields remain impressive in Dubai, Abu Dhabi

Dubai - Figures released by the Dubai Land Department depict healthy activity currently under way

With the year moving beyond the first half, figures released by the Dubai Land Department (DLD) depict healthy activity currently under way in Dubai. Investment in Dubai's real estate sector in the first half of the year crossed Dh57 billion, and there was encouraging news coming out of Sharjah's realty market as well - the city pulled in investment worth Dh12.1 billion in H1. The real estate market in Abu Dhabi continued to attract investors with high rental returns and value appreciation.
Dubai
In July 2016, Dubai's real estate market remained strong with rental yields going as high as 6.5 per cent in select apartment categories. Overall, however, apartment rents were seen becoming more affordable, with a downward adjustment in July of two per cent. Average yields across all bed categories was recorded at 5.6 per cent.
As per Bayut's findings, the average rent for studio apartments in Dubai remained stable at Dh57,000. However, the average came down six per cent in a year-on-year analysis with July 2015.
The units returned an average rental yield of 6.3 per cent in July 2016, with the average rent for 1-bed units recorded at Dh92,000 and rental yield hovering close to the 6.5 per cent mark. The average rent was seven per cent less in July 2016 than the average rent in H1 2016.
Two-bed apartments fetched owners Dh145,000 in July after a downward adjustment of three per cent. However, rental yield remained attractive at six per cent. Commanding Dh206,000, average rent of 3-bed units remained stable when compared with H1 2016 values, and the rental yield was 5.4 per cent in July 2016.
The largest apartments, the 4+ bed category, returned an average annual rent of Dh304,000 in July 2016, exhibiting a two per cent drop in value from H1 2016. Average yield for these units was recorded at four per cent.
The top localities for renting apartments in Dubai (July) were Dubai Marina, Jumeirah Lakes Towers (JLT), Downtown Dubai, Bur Dubai and Dubai Silicon Oasis.
The top localities for buying apartments in Dubai (July) were Dubai Marina, JLT, Downtown Dubai, the Palm Jumeirah and Business Bay.
Abu Dhabi
For the month of July, the average apartment rent in the UAE capital was recorded at Dh126,000 per annum, a six per cent downward adjustment from the average rent recorded in H1 2016. Still, the average rental return remained at an attractive seven per cent in July 2016
Compared to values calculated in July 2015, the average studio rent in Abu Dhabi dropped five per cent to Dh56,000 in July 2016, while rental values of 1-bed apartments adjusted downwards by six per cent to Dh91,000. Two-bed and three-bed apartment rents fell to Dh129,000 and Dh172,000, respectively, registering decreases of four per cent and five per cent. The average rent of 4+ bed apartments also came down by four per cent to Dh247,000 on average in July 2016.
However, the drops in rents were neutralised by the impressive yields (seven per cent on average). Studio apartments topped the yields chart by returning 7.4 per cent in July, while 1-bed and 2-bed apartments returned yields of 7.3 per cent and 6.9 per cent respectively. The average rental yield of 3-bed apartments rose to 6.3 per cent, while the 4+ bed category returned 5.5 per cent in rental yield during July 2016.
The top localities for renting apartments in Abu Dhabi (July 2016) were Al Reem Island, Al Raha Beach, Khalifa City A, Al Muroor and Al Khalidiyah.
The top localities for buying in apartments in Abu Dhabi (July 2016) were Al Reem Island, Al Raha Beach, Al Reef, Saadiyat Island and Al Ghadeer.
At a time of general global slowdown, the performance of the UAE's realty market continues to inspire trust in investors. Both Dubai and Abu Dhabi continue to be safe havens for global realty investors and the increasing prospects of Sharjah's real estate sector provide another avenue for parking international wealth in a quickly developing market. Though rents have seen periodic adjustments, the UAE's unique selling propositions such as a smart, diversifying economy, security of investment and the great promise of Expo 2020 will keep the real estate and its allied sectors thriving in the months to come.
- business@khaleejtimes.com