Dubai remains an attractive market for property investors despite softening rents and sale prices this year as the emirate still offers stable returns on real estate investment, a latest report says.
Property portal Bayut's annual report for 2017 indicated a seven per cent and five per cent average return on investment on apartments and villas, respectively, in Dubai this year.
"As more and more off-plan projects are completed in 2018, handed over and put on the secondary market, we can expect prices continuing to attract investors while landlords will have to stay competitive to entice potential tenants," chief executive of Bayut Haider Ali Khan said.
"In the long run, as the market and the broader economy move on a trajectory of diversification and maturity, the opportunity for developers and sellers to capitalise on their investment remains strong," Khan added.
Atif Rahman, director and partner of Danube Properties, said Dubai is perhaps one of the best real estate markets from an investment perspective, where rental return on investment is one of the highest.
"Typically, an investor can easily fetch seven to 10 per cent annual rental returns, depending on the location, product quality and size of the property. In most developed markets worldwide, the rental yields vary from two to five per cent," Rahman said.
The report said apartment rents in Dubai remained on the decline with highest decrease of 16 per cent recorded in International City where tenants paid annual rents of Dh31,000, Dh42,000 and Dh65,000 for studios, one- and two-bedroom apartments, respectively. Dubai Silicon Oasis, Mirdif, Bur Dubai, Deira and Al Nahda were other sought-after areas for renting apartments this year.
For villas and townhouses for rent, Mirdif was the top choice of tenants and followed by homes in Jumeirah, Al Barsha, Umm Suqeim and Arabian Ranches.
Mirdif was the most affordable villa community with yearly leases of Dh130,000, Dh145,000 and Dh150,000 for three-, four- and five-bedroom villas, respectively, with a 9 per cent to 13 per cent year-on-year drop.
Palm Jumeirah was the most expensive popular villa locality in Dubai this year with yearly leases of Dh315,000, Dh420,000 and Dh450,000 for three-, four- and five-bedroom villas, respectively, with a six per cent to 13 per cent year-on-year decline this year.
Dubai Marina was the most desirable Dubai community for buying apartments this year, followed by Downtown Dubai, Jumeirah Village Circle, Jumeirah Lake Towers (JLT) and Palm Jumeirah. Investors paid Dh850,000, Dh1.35 million and Dh2.2 million for studios, one- and two-bedroom apartments, respectively.
Palm Jumeirah remained the most extravagant popular area with studios, one- and two-bedroom flats, demanding Dh1.25 million, Dh2.4 million and Dh2.7 million, respectively.
In terms of investment in the affordable segment, Dubai International City remained the most cost-effective to investors as studios, one- and two-bedroom apartments were priced at Dh350,000, Dh475,000 and Dh850,000, respectively, roughly reflecting a 5 per cent decline from 2016.