Revealed: Cities where buy-to-let properties earn best returns

Dubai offers second best rental yields in the Middle East and North Africa region

Here’s confirmation of something that you might have already guessed. A report by Global Property Guide has revealed that rental yields in Dubai are the second highest in the Middle East and North Africa (Mena) region.

The study compared the rental yields of apartments, all about 120sqm in size, across various countries. With gross rental yields of 6.89 per cent per annum, Dubai (UAE) ranks behind Amman (Jordan), but is ahead of Cairo (Egypt), Marrakesh (Morocco) and Beirut (Lebanon), comprising the regional Top 5.

Globally, the study ranked Dubai (UAE) at #23, rating rental yield as “moderate to good”. With a “spectacular” 10 per cent rental yield, Chisinau, the capital of Eastern European state of Moldova, is the best place for buy-to-let property investors, according to the Global Property Guide.

Kingston in Jamaica (9.75 per cent annual rental yield), Jakarta in Indonesia (9.31 per cent), Amman in Jordan (9.25 per cent) and Kiev in Ukraine (9.09 per cent) make up the other Top 5 global cities Dubai-based real estate developer Damac Properties welcomed the news in a media statement.

“The UAE has higher rental returns than some of the most popular locations for property investment in the world. With yields at 6.89 per cent, the UAE offers much higher rental returns than for example the UK and more than double the rental yield of Hong Kong,” said Niall Mc Loughlin, Senior Vice-President of Damac Properties.

Another important factor for investors to consider is the favourable tax environment in the UAE. Rental income is tax-free, and there are no capital gains taxes levied on the sale of properties.

“The property market in the UAE is changing remarkably; three years ago it was dominated by investors pursuing capital growth, and now that prices have stabilised, it’s characterised by investors seeking continually high rental yields. While the returns aren’t as lucrative, they are still relatively high and most importantly, they are consistent,” said Mc Loughlin.

According to the research, Jordan offers the highest rental returns in the Mena region, with gross yields of 10%. While gross yields in the UAE are slightly lower, they are still the second highest in the Arab world.

“Rental yields are extraordinarily high in the UAE, compared to most other countries around the world. Now that prices have stabilised in premium locations, the high yields make investing in the UAE property market an attractive proposition for any global investor” said Mc Loughlin.

The positive sentiment is shared by Cluttons, the real estate advisory firm, which predicts that quality, well-established developments will continue to do well at the expense of newer residential areas. The firm also anticipates the residential market will continue to gain from increasingly available mortgage finance options at competitive rates.

“The UAE is a vibrant, global business hub with world-class infrastructure; strategic location; established tourist destinations, proven business centres; a highly skilled expat workforce; and most importantly strong and stable government leadership,” said Mc Loughlin, highlighting the benefits for potential property investors.

Rental Yields: How They Stack Up

Apartments in
Price/sq. m
Rent/mo.
Yield/ p.a
 

Andorra
€3,330
€794
2.39%
Argentina
$3,144
$2,051
6.52%
Aruba
$1,455
$1,774
7.32%
Australia
$8,774
$3,197
3.64%
Austria
€5,109
€1,873
3.67%
Bahamas
$3,632
$2,964
8.16%
Belgium
€2,753
€1,234
4.48%
Bermuda
$7,056
$5,597
4.76%
Brazil
$3,836
$2,191
5.71%
BVI
$6,469
$3,071
2.85%
Bulgaria
€1,305
€547
4.19%
Cambodia
$3,750
$1,529
3.26%
Canada
$8,288
$3,047
3.68%
Cayman Is.
$4,163
$3,018
7.25%
Chile
$1,794
$1,613
8.99%
China
$6,932
$1,841
2.66%
Colombia
$2,102
$1,568
7.46%
Costa Rica
$1,642
$1,147
8.38%
Croatia
€2,081
€948
4.56%
Cyprus
€2,140
€877
4.10%
Czech Rep.
€4,040
€1,248
3.09%
Denmark
€3,782
€2,016
5.33%
Ecuador
$958
$756
7.89%
Egypt
$1,025
$860
6.71%
El Salvador
$1,189
$916
7.70%
Estonia
€2,153
€859
3.99%
Finland
€6,184
€2,352
3.80%
France
€13,380
€4,357
3.26%
Gambia
$667
$330
5.94%
Germany
€3,704
€1,382
3.73%
Greece
€4,936
€1,223
2.48%
Guadeloupe
$2,936
$1,514
5.15%
Hong Kong
$20,371
$6,328
3.11%
Hungary
€1,645
€1,181
7.18%
India
$11,306
$3,031
2.68%
Indonesia
$2,099
$1,955
9.31%
Israel
$7,773
$2,988
3.84%
Italy
€7,213
€2,932
4.06%
Jamaica
$1,404
$1,369
9.75%
Japan
$15,122
$6,750
4.46%
Jordan
$1,106
$1,280
9.25%
Kenya
$900
$1,616
7.18%
Latvia
€2,657
€858
3.23%
Lebanon
$3,223
$1,872
4.65%
Lithuania
€2,189
€877
4.01%
Luxembourg
€5,647
€2,093
3.71%
Macedonia
€1,232
€787
6.39%
Madagascar
$520
$320
7.38%
Malaysia
$2,182
$1,356
6.21%
Malta
€1,847
€688
3.72%
Martinique
$2,979
$1,524
5.12%
Mexico
$2,085
$1,828
8.77%
Moldova
€965
€965
10.00%
Monaco
€39,421
€6,823
1.73%
Morocco
$2,101
$1,280
6.09%
Netherlands
€4,271
€2,180
5.11%
New Zealand
$4,622
$3,405
6.80%
Nicaragua
$1,342
$1,596
7.13%
Panama
$2,128
$1,922
9.03%
Peru
$1,306
$1,067
8.17%
Philippines
$3,204
$2,761
8.62%
Poland
€3,326
€1,626
4.89%
Portugal
€2,213
€1,159
5.24%
Puerto Rico
$1,357
$1,209
5.35%
Romania
€2,180
€1,098
5.04%
Russia
€10,302
€4,313
4.19%
Serbia
€2,135
€1,266
5.93%
Singapore
$16,727
$4,905
2.94%
Slovak Rep.
€2,020
€1,154
5.71%
Slovenia
€2,786
€1,250
4.49%
South Africa
$4,272
$2,466
5.77%
Spain
€4,022
€1,372
3.41%
St Kitts and Nevis
$3,496
$1,712
4.90%
St Lucia
$1,860
$1,108
3.57%
St Martin
$3,267
$4,000
4.90%
Switzerland
€11,397
€4,114
3.61%
Taiwan
$7,112
$1,117
1.57%
Tanzania
$700
$500
8.57%
Thailand
$2,996
$1,957
6.53%
Trinidad & T.
$2,334
$1,607
6.88%
Turkey
€2,983
€1,735
5.82%
Ukraine
€2,807
€2,550
9.09%
UAE
$3,393
$2,338
6.89%
UK
€15,187
€6,540
4.31%
USA
$13,428
$6,304
4.69%
Uruguay
$1,959
$1,494
7.63%

Source: Global Property Guide

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