DUBAI's RED-HOT RENTAL MARKET: Prime Investment Opportunities Unveiled
According to reports, Dubai has enjoyed one of the best performing rental markets over the last year with a surge in activity, high occupancy rates due to limited rental stock, and steady rental yields of between 4% and 8%.
Dubai is now regarded as the pinnacle of property investment across all global markets, offering lucrative rental returns according to Samuel Seeff, chairman of the Seeff Property Group. It is one of the hottest rental investment markets with high demand and limited stock, at least until such time as the new off-plan developments are completed.
According to the Dubai Land Department, total property transactions spiked by 33.8% in volume and 36.7% value terms last year. The rental market surged by 23% in the third quarter with leads for rentals increasing by a phenomenal 119%. Sales of villas and townhouses in particular soared by 34% with sales in the secondary market for villas increasing by 38%.
Nombasa Mawela, licensee for Seeff Dubai, says the forecast for 2024 is even better, offering greater opportunity for South African investors to diversify their property portfolios for better returns. There is opportunity in getting into the market now with excellent off-plan developments tailored to the rental investment market, offering attractive financing plans. By the time the developments are complete, values will likely already have increased, leaving investors with a considerable asset, she adds.
The rental market comprises a mix of short-term rentals with people visiting the city in their millions. Dubai Tourism statistics show that some 15.37 million people visited between January and November 2023. There is also a strong residential rental market with a high percentage of renewals which offer good security for investors.
Dubai is now positioned as a “global hub for business, tourism and investment” with pro-investor policies and an attractive lifestyle, and Seeff says its allure is global with a diverse clientele and wealth continuing to flock to the city as opportunities expand. For South African investors, it could be an excellent store of wealth and hedge against the fluctuation of the Rand.
While South African investors are often hampered by the weak Rand in terms of investing overseas, the upside is that the Dubai rental investment market is very accessible with pricing from around R2.3 million (AED 450,000). Mortgages are available for up to 75% of the purchase price. The developers are also providing flexible payment plans of up to five years for those not wanting a mortgage.
Seeff says investing in Dubai property provides the opportunity to shift some funds offshore into a lucrative investment destination. Entry level prices tend to compare well to the upper middle class and luxury sector in South Africa. The demand is such that investors can earn excellent returns which can part-fund your investment. On one particular development for example, taking the rental returns into account means you would only be paying around 66% of the value of the purchase price, the rest being financed by the rental income.
Uncover Dubai's Prime Opportunities for a Lucrative Portfolio
Mag 330 in City of Arabia
- Priced from approx. R5.5M (AED1,078M)
- One-bedroomed unit
- 50% Payable over 2.5 years
- Balance after handover over a 4-year period
- ROI of 14.1%.
Merce House by Ellington in Uptown Dubai
- Pricedfrom approx. R13.4M (AED2,6M)
- One-bedroomed unit
- 20% Down payment
- Structured payment plan
- Rental yield 6%-8%.
Armani Beach Residences in Palm Jumeirah
- Priced from approx. R25.9M (AED5M)
- Two-bedroomed unit
- 25% down payment
- Three-year instalments
- Rental yield of 5%-8%
You could later sell the property, or keep it should you decide to relocate to Dubai, or if you are looking for a second passport which is seeing an increase in demand from South Africa, you could probably sell the property and upgrade to meet that threshold.
