UAE buy-to-let yields still attractive despite 2017 slump

Propertyfinder research says Dubai yields in retreat as rent declines outpace fall in sales prices

Yields for UAE buy-to-let investors are in retreat as declines in rental values outpace a slump in sales prices, according to Propertyfinder Group.

The real estate portal’s ’s UAE Real Estate Trends 2017 report revealed that yields still remain generous compared with global norms.

Propertyfinder Group said it analysed apartment and villa sales and rental prices in Dubai, Abu Dhabi and the Northern Emirates.

Rental yields fell in 15 of Dubai’s 23 apartment neighbourhoods and in 11 of the city’s 16 villa districts in the six months from September 2016 to March 2017.

These declines left apartment yields varying from 5.2 percent on Palm Jumeirah to 9.5 percent in Discovery Gardens. For villas, yields range from 3.1 percent in Emirates Hills to 6.5 percent in Jumeirah Village Circle.

The report said Dubai’s peripheral areas – deemed a higher risk by many investors and therefore priced accordingly – offer some of the best yields. Of the 10 districts with per square foot selling prices below AED1,000, Motor city provides the lowest yield at 7.9 percent.

“Dubai continues to be a multi-tiered market where the most desirable locations offer the worst rental yields, while the best yields are found in emerging communities surrounded by desert and mass construction,” said Propertyfinder’s report.

It added that rental values fell by a greater margin than sales prices, largely following the same trend in each neighbourhood.

Propertyfinder said this suggests landlords have proved more willing to cut their asking prices than those wishing to sell and perhaps points to ebbing demand and oversupply in the rental sector.

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