Find out what is a good rental yield in Dubai.
Investing in property in Dubai is a brilliant option for both resident and international investors. The low, sometimes non-existent, property taxes, visa incentives and very high rental yields make it an attractive place to invest.
Read on to find out the best locations for property investment, where to achieve the best rental yields in Dubai, and what to think about if you’re a foreigner investing in real estate.
image by Sascha Bosshard
Table of contents
- What are the best locations for property investment?
- Is buying real estate a good investment?
- What is a good rental yield in Dubai?
- Why invest in property in Dubai?
- What taxes do you pay on rental income in Dubai?
- Can foreigners buy property in Dubai?
- Is now a good time to invest in property in Dubai?
- Short, mid or long-term?
- Invest in Dubai with GuestReady
1. What are the best locations for property investment in Dubai?
According to data sourced by the Property Monitor Index, the highest-yielding areas of Dubai for real estate investment are currently International City, Dubai Studio City, Discovery Gardens, Dubai Production City, Liwan and Remraam. The most expensive regions for purchasing villas and apartments are Palm Jumeirah, Mohammed Bin Rashid City Town, Jumeirah Islands, Dubai Creek Harbour, City Walk and Downtown Dubai.
Here is a list of the best rental yields in the neighbourhoods that are considered to be the best to invest in property in Dubai, along with relevant data.
Buy-to-let Jumeirah Village Circle
- 7.5% rental yield
- $2.146 average price per m2
Jumeirah Village Circle is a development that contains over 350 apartment buildings and townhouse rows. It began construction in 2005, and is built over an area of 870 hectares. The current estimated population is 25.000, but this is expected to grow to as much as 300.000 when the development is complete.
The average rental yield in Jumeirah Village Circle is 6.21% for an apartment, and 5.86% for a villa, making it a solid place to invest in both short and long-term rental investments. The average sale price of a villa in this area is currently one of the lowest, at 2.2 million AED, or just under $600.000 USD. The average sale price of an apartment is approximately 850.000 AED, which is roughly 230.000 USD. Its affordability makes it a great place for investors who are new to real estate.
If you’re looking to start a short-term let business in Dubai, get in touch with one of the real estate experts at GuestReady, who can provide you with an estimated return for the property you are looking to buy.
Buy-to-let Downtown Dubai
- 5.4% rental yield
- $3.978 average price per m2
The Dubai Downtown was renamed from Umm Al Tarif in 2000 and is home to some of Dubai’s largest and most famous landmarks. The region is currently home to approximately 13,000 people and is home to a mix of residential, leisure and tourism buildings.
The average rental yield in Downtown is 5.43% for apartments, and the average sale price of one of these apartments is just over 2.1 million AED, or $572.000 USD. The area is extremely popular with tourists, making it a fantastic area to invest in short-term accommodation. GuestReady helps property investors buying real estate, who are looking to start a short-term let business by providing an estimated return for their property and property maintenance services.
Buy-to-let Palm Jumeirah
- 5.3% annual yield
- $3.538 average price per m2
The Palm Jumeirah is a series of man-made islands of reclaimed land in Dubai, extending into the Persian Gulf. It is part of Dubai’s famous ‘Palm Islands’, which also includes the incomplete Palm Jebel Ali and Palm Deira. The Palm Jumeirah was built between 2001 and 2006, and currently has an estimated population of approximately 10.000 people. The islands host a mix of residential units, hotels, resorts, shopping and restaurants.
The average gross rental yield of Palm Jumeirah is currently 5.3% for apartments and 3.4% for garden homes. The average sale price of an apartment in the area is approximately 3.4 million AED, which is roughly $926.000 USD. The average sale price of a garden home is approximately 18.5 million AED, which is roughly $5 million USD. These figures make it the most expensive region of Dubai by quite some margin.
Buy-to-let Business Bay
- 5.3% annual yield
- $3.440 average price per m2
Business Bay is a CBD (Central Business District) in Dubai, containing residential, office and commercial developments, many of which are skyscrapers. The population, once the development is fully complete, is expected to be approximately 190.000 people, with even more people employed in the region.
The average rental yield for an apartment in Business Bay is currently 5.3%, and the average sale price is 1.9 million AED, or roughly $517.000 USD, making it the 10th most expensive region of Dubai. With so many employment opportunities, the area boasts great returns for both long and short-term rental investments.
Buy-to-let City Walk
- 5.2% annual yield
- $4.065 average price per m2
City Walk is an urban district of Dubai home to a mix of residential units, restaurants, shopping and entertainment. Located in the Jumeirah district, the area is very new, with development having commenced in 2011.
The average rental yield for an apartment in City Walk is 5.25%, placing it in the middle of the pack for long and short-term rentals. It’s the second most expensive region of Dubai, with an average apartment sale price of just under 3.2 million AED, or approximately $872.000 USD, at the time of writing.
Buy-to-let Dubai Marina
- 4.8% annual yield
- $3.182 average price per m2
Dubai Marina is an artificial marina and canal city situated on the shoreline of the Persian Gulf. It is currently home to approximately 55.000 people, but when completed should have accommodation for up to 120.000 people.
The average rental yield in Marina is currently 6.3% for apartments, making it an area with one of the best rental yields. The average sale price of an apartment in this area is approximately 1.6 million AED, which is roughly $436,000 USD.
Buy-to-let Jumeirah Beach Residence
- 3.7% annual yield
- $3.745 average price per m2
Jumeirah Beach Residence is a stretch of waterfront in Dubai on the coast of the Persian Gulf. It primarily contains residential buildings, providing homes for approximately 15.000 people at the time of writing. The project was started in 2002, and was completed in 2010.
The average rental yield in Jumeirah Beach Residence is approximately 4.76%, making it one of the lower-yielding areas of the city. This is partly because it is the 6th most expensive region to purchase property in Dubai, with the average sale price of an apartment being just under 2.4 million AED, or roughly $650.000 USD.
GuestReady is an international short-term rental management company present worldwide and professionally managing properties around the globe. Are you planning on starting a short-term rental business? Get in touch with our team of experts today.
2. Is buying real estate in Dubai a good investment?
Dubai’s booming tourism sector and low mortgage registration fees make it an excellent place to invest in real estate. On top of this, those buying real estate will benefit from some of the best rental yields in the world and very low (or non-existent) taxes on their income.
3. What is a good rental yield in Dubai?
In addition to the high rental yields, property is cheaper per square foot than many other places in the world. In addition to this, the absence of many typical property taxes such as stamp duty land tax and capital gains tax makes it a very attractive market for real estate investors. Lastly, in many cases, if you buy property in Dubai you are entitled to a residency visa. The length of the residency visa is roughly proportional to the value of the property that you buy.
4. Why invest in property in Dubai?
Dubai’s booming tourism sector and low mortgage registration fees make it an excellent place to invest in real estate. On top of this, those buying property in Dubai will benefit from some of the best rental yields in the world and very low (or non-existent) taxes on their income.
5. What is the tax on rental income in Dubai?
There is no income tax for those working in the United Arab Emirates, even if you are not a full-time resident. Instead, tenants of properties pay a rental tax. If you are not resident in Dubai then you may still have to pay income tax on the rental income in the country that you reside in. There is currently no capital gains tax in the UAE.
6. Can foreigners buy property in Dubai?
Yes, investors of any nationality and residency can purchase property in Dubai, provided it has been allowed by His Highness the Ruler of the Emirate of Dubai. Foreign investors often choose to invest in real estate because of the high average rental yields and cheaper finance options.
7. Is now a good time to invest in property in Dubai?
Dubai’s economy is slowly but surely bouncing back after the coronavirus pandemic. With increasing property prices and increasing rents in Dubai, 2022 is a great time to invest in both short-term and long-term rentals.
8. Short, medium or long term?
Photo by Zaib Azhar
Long-term rental investments tend to be lower-yielding, but many investors choose this route because it is seemingly easier to achieve and gives a more secure return due to stable rental demand. Long-term rental investments tend to be better suited to residential and academic areas of a city.
On the other hand, short-term rental investments, like Airbnb accommodation, produce much higher yields for investors. These types of investment properties are better suited to touristic areas, of which Dubai has many.
9. Invest in Dubai with GuestReady
GuestReady is a short-term rental management company that assists those looking to invest in Dubai real estate at every stage of the process.
We can provide you with estimated figures of returns on particular investment strategies, and help you to start a profitable short-term let business.
We provide 24/7 communication with guests in several languages, deal with reservations management, online listings optimization, and provide cleaning services and maintenance management, among many other services.
Dubai is a fantastic place for real estate investors to purchase and retain both long-term and short-term rental properties. The high yields of up to 9%, relatively low property prices and numerous tax and visa benefits make it a great market to invest in property.
Comments by Haneen Saleh