Gross rental yields in Dubai are now moderate.
September 06, 2016
|Last Updated: Sept. 6, 2016|
|DUBAI - Apartments||COST ($)||YIELD (p.a.)||PRICE/SQ.M. ($)|
|TO BUY||MONTHLY RENT||TO BUY||MONTHLY RENT|
|90 sq. m.||401,040||1,976||5.91%||4,456||21.95|
|120 sq. m.||710,160||3,070||5.19%||5,918||25.58|
| Districts researched:
Downtown District : Downtown Burj Dubai
Marina Emirates Living District : Dubai Marina, Emirates Living, Discovery Gardens, Jumeirah Lake Towers
Palm Jumeirah: The Palm, Jumeirah
Source: Global Property Guide Definitions: Data FAQ See also: Update Schedule
Apartments in Dubai now sell for around USD 4,400 to USD 6,000 per square metre (sq m):
- Medium-sized apartments (120 sq. m.) sell for an average of USD 5,900 per square metre (sq. m.)
- Smaller apartments (90 sq. m.) are cheaper, selling for around USD 4,400 per sq. m..
- Based on previous years' research, we imagine that significantly smaller apartments of, say 70 sq. m. and under, could earn rental yields of up to 7%. That is where the real profits lie.
Gross rental yields, i.e., the gross returns on investment if the apartment is fully rented out, are moderate to good, range from 5.2% on medium sized apartments, to 5.9% on somewhat smaller apartments, the difference stemming from the lower cost of the smaller apartments in per sq. n. terms. This is an unusual pattern - smaller apartments usually are more expensive than larger apartments (per sq. m.) in the other major world cities.
How much will you earn? Rents from medium-sized apartments average USD 25.6 per sq. m. per month, while smaller apartments rent for a little less, at USD 22 per sq. m. per month. From the landlord's point of view, these rental levels mean that a 90 sq. m. apartment can earn rental income of around USD 2,000 per month, while 120 sq. m. apartment can earn a rental income of around USD 3,100 per month.
Conclusion: yields in Dubai are OK-ish, but the days when Dubai generated stratospheric yields are gone. Also this is a volatile market. Home prices swing up and down.
Round trip transaction costs are reasonable in Dubai. See our Dubai transaction costs analysis and our UAE transaction costs compared with other Middle Eastern countries.