Top Dubai communities giving rental returns of up to 10%
Emirate offers world’s highest rental yield; income not taxable
By Parag Deulgaonkar
Published Tuesday, January 26, 2016
A majority of affordable housing developments in Dubai are offering the best rental returns to investors.
# Discovery Gardens
Topping the list, released by property consultancy Land Sterling, is Discovery Gardens, a master community off Sheikh Zayed Road.
Gross rental yield stood at 10.2 per cent in 2015 compared to 9.4 per cent in 2014, as the average selling prices fell to Dh846 per square foot (psf), down 7 per cent, from Dh913 psf in 2014.
Net rental yield was at 8.77 per cent compared to 8.04 per cent in 2014, while rents ranged between Dh51,000 and Dh97,000 per annum (pa) last year compared to Dh51,000 and Dh96,000 in 2014.
# Jumeirah Village Circle
Jumeriah Village Circle was ranked second on the list. Gross and net rental yields for 2015 were 10 per cent and 8.86 per cent, respectively, compared to 8.50 per cent and 7.42 per cent in 2014.
Average sales prices were Dh868 psf compared to Dh956 psf in 2014. Rents ranged between Dh53,000 and Dh143,000 pa as against Dh51,000 and Dh125,000 pa in 2014
# Dubai Silicon Oasis
Third position was taken by Dubai Silicon Oasis. Gross and net rental returns were 9.80 per cent and 8.38 per cent, respectively, for 2015, compared to 9.50 per cent and 8.10 per cent in 2014.
Average sales prices in the community stood at Dh821 psf as against Dh825 psf in 2014, while rents ranged from Dh49,000 to Dh88,000 pa compared to Dh47,000 to Dh87,000 pa in 2014.
# International City
Fourth position went to International City. Gross and net rental returns were 9.20 per cent and 8.29 per cent last year, compared to 8.60 per cent and 7.71 per cent in 2014. Unit prices averaged Dh729 psf, while rents ranged from Dh38,000 to Dh99,000 pa.
# Dubai Sports City, IMPZ, The Greens
Three communities – Dubai Sports City, International Media Production Zone (IMPZ) and The Greens – shared the fifth position on gross rental yields. They offered investors a healthy return of 8.80 per cent in 2015.
However, net rental yield in Dubai Sports City was 7.81 per cent last year compared to 7.70 per cent in 2014. Average sales prices stood at Dh1008 psf compared to Dh984 psf in 2014.
IMPZ and The Greens offered net rental returns of 7.71 per cent and 7.89 per cent, respectively, in 2015.
Average unit prices were Dh910 psf and Dh1363 psf, respectively, while rents for the former was Dh44,000 to Dh116,000 pa and for the latter stood at Dh72,000 to Dh175,000 pa.
# Business Bay
Business Bay followed the above communities and reported a gross and net rental yield of 8.50 per cent and 7.85 per cent for 2015 compared to 8.80 per cent and 8 per cent in 2014.
Average prices were Dh1,425 psf with rents being between Dh85,000 to Dh195,000 pa
# Jumeirah Lakes Towers
Jumeirah Lakes Towers held the ninth rank as rental returns for 2015 stood at 8.30 per cent (gross) and 7.07 per cent (net).
Average prices stood at Dh1,223 psf and lease rates hovered between Dh65,000 to D184,000 pa.
# Dubai Marina
In 2015, gross and rental returns in Dubai Marina were 8.10 per cent and 7.16 per cent with average prices being Dh1,575 psf and average rents being Dh85,000 to Dh223,000 pa.
# Palm Jumeirah
According to the consultancy, Palm Jumeirah’s gross and net rental yield for 2015 stood at 6.30 per cent and 5.59 per cent in 2015. Average prices per square foot was Dh1,605, while rents were between Dh140,000 and Dh235,000 pa.
# Downtown Dubai
Downtown Dubai’s gross and net rental yield stood at 6.40 per cent and 5.60 per cent, respectively, in 2015. Average sales were Dh2,203 psf, while rents ranged from Dh92,000 to Dh246,000 pa.
Global Property Guide, a website that compiles and analyses property price performance of the world’s big economies, states Dubai offers rental income on average of 7.1 per cent, which is one of the highest in the world.
In comparison, gross rental yields in Hong Kong are 2.82 per cent, India 2.22 per cent and Singapore 2.83 per cent, London between 2.72 per cent and 3.20 per cent.
In the UAE, banks do allow foreigners to open savings account, which can be used to deposit the rental cheques. Besides, the rental income is not taxable.