Dubai's property boom offers attractive rental investments

Dubai's rental market has experienced significant growth in the past year, boasting high occupancy rates and steady rental yields of between 4% and 8%.

Data from the Dubai Land Department shows the volume of property transactions surged by 33.8% and the total value by 36.7% over the last year. The rental market witnessed a remarkable 23% increase in the third quarter, with leads for rentals skyrocketing by 119%. Sales of villas and townhouses particularly flourished, with a 34% increase overall and a striking 38% surge in secondary market villa sales.

Dubai has become a premier destination for property investment, attracting buyer and investor interest from across the globe. It is also particularly enticing for South African buyers and investors.

The rental market comprises a blend of short-term rentals catering for the millions of annual visitors, and a robust residential rental sector characterized by a high rate of renewals, providing stability for investors.

Seeff Dubai recently launched to great success. Nombasa Mawela, licensee for Seeff Dubai, anticipates an even brighter outlook for the market for 2024, which presents excellent opportunities for South African investors seeking to diversify their property portfolios. Indeed, the market has been off to a flying start with Seeff Dubai already scooping six luxury sales in January alone.

With Dubai emerging as a "global hub for business, tourism, and investment," bolstered by pro-investor policies and an appealing lifestyle, Seeff emphasizes its attractiveness to a diverse clientele, including South African investors seeking wealth preservation amid currency fluctuations.

The market's appeal lies in its high demand and limited supply, a trend expected to persist until new off-plan developments are completed. In the meantime, there are plenty of developments which are selling off-plan and are ideal for investment now.

Despite challenges posed by the weak Rand, South African investors find the Dubai property market very accessible. Entry-level prices start from approximately R2.3 million (AED 450,000) with some exciting new developments from around ZAR5.5 million (AED1,078M).

There are attractive financing plans offered alongside these off-plan developments tailored for the rental market. These offer flexible payment plans to enable buyers to get into the market as early as possible. Early entry into the market is encouraged to capitalize on potential value appreciation upon completion.

Buyers can also secure mortgages to cover up to 75% of the purchase price.

Seeff underscores Dubai property investment as an opportunity to diversify funds offshore into a lucrative market, with entry-level prices often comparable to South Africa's upper middle class and luxury sectors.

High demand translates to excellent returns, with rental income potentially offsetting a significant portion of the investment, says Nombasa. Investors can also explore avenues such as selling the property, relocating to Dubai, or pursuing a second passport, capitalizing on increased demand from South Africa.

Nombasa says three new developments offer excellent value, namely Mag 330 in City of Arabia, Merce House by Ellington in Uptown Dubai, and Armani Beach Residences in Palm Jumeirah, each offering varying payment structures and attractive rental yields.

Mag 330 in City of Arabia prices start at about ZAR5.5 million (AED1,078M) for a one-bed unit. 50% is payable over 2.5 years. The balance is due after handover over a 4-year period. The anticipated ROI is 14.1%.

Merce House by Ellington in Uptown Dubai prices start at about ZAR13.4 million (AED2,6M) for a one-bed unit. A 20% down payment is required and there is a structured payment plan. The anticipated rental yield is 6%-8%.

Armani Beach Residences in Palm Jumeirah prices start at about ZAR25.9 million (AED5M) for a two-bed unit. A 25% down payment is required, and further installments are payable. The anticipated rental yield is 5%-8%.

South Africans are also able to open a bank account in Dubai to move some funds offshore. There are now also attractive visa options available.

Nombasa is visiting Nigeria and Cape Town this month for a roadshow, but she is also available at any time for an online or telephonic consultation with anyone interested in investing in this lucrative market.

For more information, contact Seeff Dubai, Nombasa Mawela at nombasa.mawela@seeff.com or visit https://dubai.seeff.com.