Seeking buyers, Dubai developers guarantee 8-10% rental returns

After offering to pay the property registration fee, developers in Dubai are now offering guaranteed rental income plans to attract global investors.

Damac Properties, one of the largest private developers, is guaranteeing 24 per cent, or an eight per cent rental yield per year, for three years to their unit buyers.

The developer, in a statement, said owners will be able to receive eight per cent a year returns for the first three years following the handover of the units.

“We strongly believe that Dubai is set for stable growth in the medium term and we are backing that up by offering a 24 per cent rental guarantee to give reassurance to buyers,” said Niall McLoughlin, Senior Vice-President, Damac Properties.

He admits that they have seen quite a bit of scaremongering in recent months which can have a detrimental effect on sentiment in the market.

“By providing such a high, tax-free offering on our units, we are putting our head above the rest and underwriting any fluctuations that may occur down the line. When you also factor in the potential for capital growth, I don’t know of a better, more secure investment opportunity anywhere,” said McLoughlin.

Knight Frank’s The Hub reports reveals that a $3 million investment in Dubai real estate in 2008 would have fetched $4.8 million in 2014 which is higher than global cities such as London, Paris, New York, Hong Kong, Singapore and Sydney.

The rental guarantee scheme is being offered on some villas at Akoya Oxygen and Akoya by Damac; Damac Towers by Paramount Hotels & Resorts (A, B and D); NAIA Ghalia, Damac Maison Majestine; Merano Tower; Paramount Tower Hotel & Residences; Damac Maison Privé (A and B), and NAIA Vantage.

10% return on Palm

Another developer, Seven Tides International, has upped the ante guaranteeing a return on investment (RoI) of 10 per cent net per annum for three years under its hotel managed rental scheme.

The company has released 73 hotel rooms within its Anantara Dubai The Palm Residences development, with prices starting at Dh1.3 million and going up to Dh1.76 million.

“The hotel rooms represent an equally solid investment opportunity. Ready for rental from day one of handover, this means that investors will be able to quickly realise RoI potential, which will be bolstered by the appeal of the hotel's luxury positioning and exceptional facilities,” company CEO Abdulla bin Sulayem said in a statement.

The Address rental pool

Properties agents told Emirates 24|7 that unit buyers in Emaar Properties’ The Address Residence Dubai Opera were being offered the facility to put their apartments in the hotel pool to ensure recurring income. They, however, did not disclose the expected rental yield.

The Global Property Guide, a property website, puts gross rental yields in Dubai to be among the highest in the world and ranging between 5 and 7.21 per cent per annum. The International Monetary Fund too has stated that gross rental yields in the UAE have risen since mid-2014, registering a six per cent year-on-year increase in March 2015.

This website reported in November 2015 that property developers were waiving the four per cent property registration fees (charged by Dubai Land Department) in order to attract new buyers to their off plan or under-construction projects.

Read: Dubai developers waive 4% property registration fee

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