Research reveals Dubai Property generates 3% higher yields on average than global property hotspots

Research reveals Dubai Property generates 3% higher yields on average than global property hotspots

An undervalued market, lack of property tax and low mortgage rates have seen Dubai property investors reap significantly larger returns than investors based in other global property hotspots.

Summary

  • Dubai property delivers average yields of 7% plus
  • For greatest yields investors are advised to purchase property in emergent areas
  • Low mortgage costs, lack of property tax and an undervalued market all make Dubai an attractive choice for investors

 

Investments in Dubai residential properties are performing better in terms of yields than properties in a number of the world’s leading cities, according to recent report by REIDIN.

Consistently delivering average yields of 7% plus, Dubai outperforms global property hotspots including London (3.5%) New York (4.5%), Sydney (4.4%) and Hong Kong (2.5%)

Mahendra Singh, Managing Director of Aurum Real Estate, comments: “Dubai offers the best yields among emerging and established property hotspots globally. Property yields here range between 6 to 8%. Short-term property yields range between 9 to 12% while yields for serviced units range between 7 to 8%.”

In addition to delivering the best return on investment (ROI), the Dubai property market remains significantly undervalued compared to many other major global cities. As a result, investors are able to purchase property at low prices and reap rich dividends, while the absence of property tax further adds to Dubai’s investment appeal.

The current cost of a mortgage also makes Dubai property very attractive to investors. With an average mortgage rate of around 4% and an average return of 7%, income generated from rent can cover mortgage instalments and still leave 3% for the investor.

In regards to the best yield-generating locations, Ozan Demir, Research and Data Manager for REIDIN comments: “Secondary areas offer better rental returns compared to primary areas. In general, small-sized and low-priced units have greater returns.”

However, while properties in premium areas such as Palm Jumeirah, Dubai Marina and Downtown produce relatively lower yields, there is much more room for property appreciation, which also makes for an attractive investment.

For Investors 2017 will be about finding a balance between ROI and capital appreciation. Studios based in Business Bay are a great example of this balance.

 

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