Here is an opportunity to earn 12% rental yield

Schon Properties offers an investment opportunities in its latest hospitality development project iSuites and guaranteed a 12 per cent average annual return – the highest for property investors.

The private real estate developer, which has an eight million square feet development portfolio valued at Dh7 billion, will retain a third of the 2,550 units in iSuites and offers a limited number of units to the public to purchase and benefit from a higher return on investment.

“Our study shows that an investor could get an average net income yield of 12 per cent return on investment from our latest offering that will help investors make more money with less pain,” Noorul Asif, chief operating officer of Schon Properties, said.

To a question, he said 12 per cent rental yield calculation is based on a 70 per cent occupancy rate on a daily room rate of Dh550. It is going to be higher on both counts, given the new developments on the south side of Dubai, he said.

“The rental yield in Dubai is about seven to eight per cent per annum. So, on a Dh1 million property, an investor could count on Dh70,000 to Dh80,000 rents per annum,” Asif told Khaleej Times on Tuesday.

He said serviced apartments have a higher rental as they are rented on daily, weekly and monthly basis where the rates are higher. Moreover, when branded hotel management companies run them, an investor could count a higher premium on the rental yield.

Asif further claimed that the yield is backed by strong numbers of tourists coming in the proximity of the iSuites site which will lead to strong occupancy levels and high average daily rates. The movement of 160 million passengers through Al Maktoum International Airport, 25 million tourists to the Eexpo 2020 site and five million annual tourists at Dubai Parks and Resorts – are the three mega demand drivers for iSuites.

“All these projects are what most of us in Dubai are banking on, and with our location next to them, we are very confident in the long-term prospect of the venture. The price appreciation of the properties in Dubai South will start accelerating from 2018 when the countdown to Dubai Expo 2020 picks up,” he said.

“I think 12 per cent rental yield is very conservative estimate. We anticipate around 50 per cent capital appreciation till then. The projected yield should not be lowered and it can only go up. In all probability, the annual income yield could exceed 15 per cent, in which case, the investor could get back the entire value of the investment in less than seven years,” Asif concluded.

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