Mortgage Choice defines rental yield as the rate of income return over the cost associated with an investment property, typically expressed as a percentage. It’s a frequently used metric in property data, and it’s important for us to understand how it is calculated and what it indicates?
Rental yields in Dubai has always been one of the highest yields in the world. Property portal Bayut reports that when it comes to rental yield, Dubai has successfully beaten London, Hong Kong and India of the charts.
According to the report, top seven locations in Dubai for rental yields are:
⦁ Dubai Silicon Oasis (DSO)
⦁ Dubai Sports City
⦁ International Media Production Zone (IMPZ)
⦁ Jumeirah Village Circle (JVC)
⦁ Discovery Gardens
⦁ Motor City
⦁ International City
The studio units in Dubai Silicon Oasis (DSO) have topped the rental yield chart. The average annual rent stood high at AED 47000 while the community as of May this year offered an 11% return.
The second one on the list is Dubai Sports City with a rental yield of 10% and average rentals at AED 50000 per annum.
Studio apartments in both Jumeirah Village Circle (JVC) and International Media Production Zone (IMPZ) offered average yields of 9% while the average rent in the complex was AED 53000 pa and AED 42000 pa respectively.
Property consultancy, Land Sterling said that the Discovery Gardens offered the highest gross yield of 10.2% in 2015 compared to 9.4% in 2014. But the average rental yield has again fallen into the area. According to Bayut.com, average rental yields of Discovery Gardens stood at AED 47000 with a rental return of 9%.
In Motor City, studio units offered rental yields of 9% with an average lease rate of AED 59000. International City, which is known to be the most affordable place to rent a flat in Dubai, had an average lease rate of AED 31000 pa with rental returns at 9%.
Global Property Guide is a website that observes and analyses property price performance of the world’s biggest economies. According to the site, rental income of Dubai is the highest with an average of 7.1%. Gross rental yields in other cities and countries are comparatively small; as compared to in Singapore 2.83%, India 2.22%, Hong Kong 2.82% and in London between 2.72% and 3.20%.
Chestertons Mena Managing Director Declan McNaughton is of the view that this is a perfect time to buy a property as prices of property are clearly at a better point than it was in 2015.
However, according to Mr McNaughton, there is a consensus in the industry that the market will remain subdued during 2016, and this phase could provide excellent investment opportunities on a long-term basis.
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