Today's Edition
YOUSEF AL ARABI (ABU DHABI)
Properties in the UAE saw an average annual rental yield of approximately 8%, as the country continues to ascend the ranks of the Middle East’s preferred real estate investment destinations due to its stability, quality of life, and attractive business environment, according to experts and officials in the sector.
Sector experts told Aletihad that returns in the local real estate market are the highest among similar global markets, and have significantly contirbuted to the real estate market’s recovery in terms of investment, accelerating the pace of development and construction.
According to a recent report from the Central Bank of the UAE (CBUAE), sales prices in Abu Dhabi rose by 3.9% on an annual basis from October of the previous year, while the average rents continued their upward trend, registering an increase of 0.8% on an annual basis in the third quarter and 2.6% in October of 2023, after a 0.5% increase on an annual basis in the second quarter of 2023. This led to an average rental yield of 6.2% in the third quarter of 2023, without significant changes, compared to 6.3% in October.
In Dubai, the average rents increased by 12% on an annual basis in the third quarter of 2023, slowing down to 5.7% on an annual basis in October. This resulted in an average rental yield of 8.8% in the third quarter of 2023, without significant changes compared to 8.7% in October.
Distinguished Market Alaa Masoud, a real estate marketing expert, told Aletihad that the rental yield on properties in the country reached about 8% during 2023, noting that the real estate market in Abu Dhabi is witnessing significant momentum due to new development projects at attractive price points and diversity in real estate products.
The capital’s reast estate market is distinguished by its numerous waterfront development projects and the availability of freehold ownership, Masoud said, adding that Dubai is likewise experiencing increased demand for real estate in alignment with the Emirate’s plans to double its population and enhance the quality of life.
The sector’s momentum is expected to continue throughout the country in 2024 thanks to political stability, economic recovery, and an attractive investment environment, Masoud said.
Innovative MeasuresMuhannad Alwadiya, the CEO of Harbor Real Estate, confirmed that 2023 was an exceptional year for the UAE’s real estate market in terms of demand, quality, and momentum, as the sector set a new record in the number of real estate transactions.
“The pre-emptive and innovative measures taken by the country have been the biggest support for the real estate sector, and amendments in residency laws have led to an increase in new investments in the real estate sector,” Alwadiya said.
“A distinguishing feature of the real estate sector in the UAE at present is its reliance on the end-user of the property, with an influx of affluent groups and companies coming into the real estate market, serving as the primary driver of demand.”
Alwadiya noted that the rental yield for new leases exceeds 6%, which stimulates property sales and transactions, as property owners prefer to sell residential units at current high prices rather than lower rental yields. Owners anticipate the continuation of the sector’s recovery and growth due to various factors, such as attractive economic initiatives attracting capital and the influx of wealth and talent, he noted.
The UAE’s real estate sector successfully maintained its momentum and growth in 2023, achieving strong returns of approximately 8%, said Hassan Elshazli, the CEO of SODIC Real Estate Consultancy.
Elshazli said that a supply shortage and strong cash flows from high-net-worth individuals have led to a significant increase in rental and sales prices in various regions, noting that the diversity of the real estate products and easy payment processes have helped fuel demand for residential and commercial properties.
Elshazli said that he expects the sector to maintain its upward trajectory in 2024, with an increase in cash buyers, projecting their continued dominance in the luxury residential real estate market for the foreseeable future.
