Suburbs hold the key

Dubai - Dubai suburbs offer value for money to investors, tenants

Dubai's suburbs are where all the action is unfolding. These emerging communities attracted significant investor and tenant interest in Q1 2016.
According to Bayut.com, with more households moving to the city suburbs, investment opportunities in areas such as Dubailand and Dubai Sports City are more enticing.
The increased popularity of these localities coupled with low property prices has resulted in rental yields as high as nine per cent. Apartment rental yields in the wider city hover at six per cent and touch eight per cent in select bed categories.
"We think Dubai's suburbs are ideal for both new home buyers - who can still benefit from low prices - and investors, who can enjoy impressive rental yields thanks to these areas' rising popularity," said a Bayut.com spokesperson.
These findings resonate with research conducted by classified website dubizzle.
Sale and rental price shifts in communities such as Jumeirah Village Circle indicate higher rental yields for those considering to invest in property - with the sale price per square foot having declined by four per cent to Dh894, and rents increasing by three per cent. These figures suggest that such areas will provide increasing rental yields as the infrastructure develops to provide self-contained districts.
"While Shaikh Zayed road is the main artery of Dubai with more developed communities scattered along it, we are now seeing a gradual shift in property purchasing and rental behaviour towards newly developed areas located further in-land," said Ann Boothello, product marketing manager for property at dubizzle. "As the infrastructure of these up-coming communities nears completion, roads such as Al Khail and Mohammed Bin Zayed allow for easy access to the Dubai hot spots located nearer to Shaikh Zayed Road."
Erik Volkers, associate director, CBRE UAE, said: "We expect average residential sales prices in Dubai to further decline over the course of 2016. Despite this trend in sales prices, rents have remained relatively stable in Dubai, especially for apartments. In 2016, we expect rents to be under pressure. As a result of a flight to affordability, we expect rents in more affordable areas such as Al Furjan, International City, Jumeirah Village Circle, Discovery Gardens and Dubailand to see potential growth. More prime areas such as Dubai Marina, Palm Jumeirah and Downtown Dubai are already seeing rental deflation which is expected to continue at least in the first half of 2016. For tenants currently leasing in Dubai, this could mean that they are in a stronger position to negotiate a rent renewal or to look for a better lease elsewhere."
The Dubai Land Department reported that real estate transactions in Dubai during the first three months amounted to Dh54.78 billion through 12,568 deals. Part of the credit goes to strong rental yields that continue to make the market attractive to property investors.
The market's price adjustment, coupled with flexible payment plans offered by developers, is encouraging many tenants to become homeowners.
As per Bayut's comparison of Q1 2016 with Q1 2015, average studio rents in Dubai adjusted five per cent in the outgoing quarter, commanding an average of Dh60,000. Following the general trend, 1-bed and 2-bed apartments both adjusted four per cent, commanding Dh98,000 and Dh154,000 respectively.
The larger apartments, representing luxury and high-end amenities, posted the least declines. The 3-bed and 4+ bed categories experienced adjustments of four per cent and three per cent respectively, fetching Dh210,000 and Dh321,000.
Almost 4,600 residential units were reported to be completed in the first quarter of 2016 and 10 per cent of these were projects delayed from 2015. Majority of these were located in Jumeirah Village Circle, Mohammed Bin Rashid City and Dubailand.
- business@khaleejtimes.com