Dubai Marina yields 7.2% year-to-date, says Chestertons’ special Cityscape residential report

Chestertons MENA Cityscape report highlights Dubai’s most sought after residential communities, Dubai Marina and Dubai Downtown; unerring demand drives yields to 7.2% and 5% respectively

Chestertons MENA, a leading international property agency, has released a special Cityscape report on two of Dubai’s most popular residential neighbourhoods, Dubai Marina and Dubai Downtown, highlighting yields averaging 7.2% and 5% respectively between January and August this year.

Despite difficult macroeconomic conditions both Dubai Marina and Dubai Downtown have continued to attract a wealth of interest from investors with prices in Dubai Marina varying between AED1,362 per sqft for ready units and AED1,749 per sqft for off-plan units. In Downtown prices average at AED1,884 per sqft for ready units and AED1,976 per sqft for off-plan units.

“Overall, market yields are still proving attractive, particularly in Dubai’s most sought after residential communities. In 2014 Dubai’s real estate market began to show signs of weakening, however, marquee developments continue to exhibit yields that offer investors good returns” said Ivana Gazivoda Vucinic, Head of Advisory and Research, Chestertons MENA.

Since its completion in 2003, Dubai Marina has consistently recorded some of the highest transaction volumes and values in the emirate. From January to August 2017 the total number of transactions in ready-to-move-in units was 1,127 at a value of AED2.1 billion. The most expensive property sold during that period was AED29.7 million.

In the off-plan market there were a total of 830 transactions at a value of AED1.62 billion, with the most expensive unit sold topping AED13 million.

A steady flow of units are set to come online in the run-up to Expo 2020 with over 4,000 expected to be delivered between now and the global showpiece. This will take the number of units in Dubai Marina to over 27,000 in 117 residential apartment buildings, not including serviced apartments or branded residences. The total number of residents currently in Dubai Marina is approximately 120,000.

“Given the popularity of this world class waterfront development it is hardly surprising developers are eager to participate in projects within Dubai Marina and the surrounding area. As we move closer to Expo 2020 we are forecasting an increase in prices and number of transactions in the area thanks to the burgeoning hospitality offering and world class residential units which are sure to be a hit with savvy investors,” added Gazivoda Vucinic.

Dubai Downtown has fared similarly well in terms of investor returns. Often described as ‘one of the most exclusive neighbourhoods in the world’, the relatively mature market is currently yielding 5% per annum with further future capital appreciation a strong demand driver for potential investors.

Home to the Burj Khalifa, tallest building in the world, the largest mall and one of the most spectacular choreographed fountain systems seen anywhere in the world, strong investor appetite has been compounded by a selection of signature properties creating a unique investment dynamic despite economic and oil price distortion.

From January to August 2017 a total of 394 transactions took place in Downtown Dubai, at a value of just under AED1 billion, with the most expensive unit totalling nearly AED12 million. In the off-plan market the figures more than tripled with 1,262 units sold at a total price of over AED3.5 billion; the most expensive property was AED18.7 million.

Almost 7,000 units are expected to be delivered by 2020 taking the total number to nearly 16,000. With strong off-plan demand already in place, prices are expected to increase further as the new stock enters the market.

“Despite ongoing sustained demand for affordable rental units, as end users look to reduce the cost of living by relocating to secondary communities, Dubai’s highly sought-after areas are still transacting and returning solid yields, which is encouraging for investors who are in it for the medium to long term,” said Gazivoda Vucinic.

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