The sharp property price drop from the 2008 levels now present excellent rental returns from Dubai property. Despite small drops in rental market expected this year, the rental yields are much higher. Typically, property in prime areas such as Palm Jumeirah and Dubai Marina attract between 7-9% yields with some properties offering well over 10% yeilds.
The reason for this is that Dubai has remained robust over the last year in terms of population. After the initial population loss in 2008 due to redundancies, Dubai’s population has been steadily climbing. This population needs housing. Unfortunately, it is still very difficult to get mortgages especially for middle/lower middle class due to strict lending criteria for mortgages. This essentially has forced many would be buyers to rent. There is an oversupply of properties in some areas however the price of property already reflects this and hence the rental returns are healthy.
High rental returns are very enticing given the era of low interest rates achieved from savings accounts and traditional investment vehicles such as bonds. A long term hold of a Dubai property will yield excellent rental yields in the short term and will, almost invetiablity, achieve captial appreciation in the long term.