Return On Investment – How Does Dubai Compare Against Other Major Global Cities?

As an investor, you have a natural inclination to want to know what any potential opportunity could offer your portfolio. With property, one of the biggest focuses is on the rental yield, since the figure that can be achieved will have an impact on your return on investment, especially in the immediate vicinity. 

Over the long term, the appreciation in the property’s value is also going to be a core focus too. Hence, properties located in up and coming areas that are subject to significant financial investment are always attractive propositions. 

One such location that meets the above criteria that has certainly caught the eye of investors in recent times is Dubai. With some of the highest rental yields of any city in the world, Dubai has an abundance of potential for investors that is just waiting to be tapped into. 

The question is though, how does the Dubai property scene compare with other locations around the world? 

Using data from Numbeo, we’ve ranked some of the most famous cities in the world for their rental yield and overall potential compared with Dubai, to help shine a light on what Dubai offers for investors. 

 

Global Rental Yields 2021 At A Glance

  • Dubai – 9.19%
  • Miami – 8.33%
  • London – 7.89%
  • Los Angeles 5.52%
  • New York – 4.48%
  • Toronto – 3.93%
  • Milan – 3.46%
  • Berlin – 3.43%
  • Sydney – 2.88%
  • Singapore – 2.48%
  • Moscow – 2.47%
  • Paris – 2.27%
  • Seoul – 1.09%

Dubai 

Average rental yield: 9.19%

Average monthly wage (net): 12,328.21 AED (£2,529.33)

Average monthly rent (1 bedroom city centre apartment): 5,112.00 AED (£1,040)

Average property purchase cost per square meter (city centre): 12,679.05 AED (£1,048.40)

Unlike many of the other cities on our list, Dubai has very much taken the world by surprise, especially in the last couple of decades, with the construction of the Palm Islands, not to mention the world’s tallest building, the Burj Khalifa. If we cast our minds back to the 1960s, Dubai was merely a cluster of small settlements with less than 100,000 residents. However today, Dubai is a global hub for business and innovation, and it’s now home to over 10 million residents. 

As that famous proverb goes, ‘the best time to plant a tree was 20 years ago. The second best time is now’. Dubai is the perfect analogy for this since the quality of infrastructure in the city that investors are purchasing in today’s market is truly exquisite.

Paired with low entry points and the highest rental yield of any city in the world (2021), Dubai is the jewel in the Emirates crown for investors. 

What else do investors need to know?

  • Residents pay no income tax 
  • Living costs in Dubai are 24.26% less than in London
  • Dubai is a very safe city with extremely low crime rates
  • Thirlmere Deacon has a dedicated team in Dubai for UK investors

 The Peninsula Development In Business Bay Dubai Starting At Just £128,000

 

 

As mentioned, Dubai offers incredible potential for investors as the city with the highest rental yield in the world for 2021. 

Thirlmere Deacon has a number of investment opportunities in Dubai, including The Peninsula development built by the highly renowned Select Group. 

With prices starting at just £128,000 with a projected 8% ROI, the standard of accommodation at The Peninsula is truly exquisite. Throughout, luxury fixings and fittings have been used, ensuring the highest level of satisfaction for your investment over the longer term. 

Peninsula One’s communal amenities will include a fully equipped gym, an outdoor pool and a gravel BBQ deck. Additional features such as a spacious communal lobby, electric car charging points and Empower A/C throughout also offer plenty of convenience for residents. 

The development’s location in Business Bay couldn’t be better positioned, as it’s located on 

Sheikh Zayed Road, which is a main arterial route through the city that also connects the seven Emirates. Once completed, The Peninsula development will stand alongside the Burj Khalifa, Vision Tower and Dubai Mall, and is only a 15-minute drive from Dubai International Airport. 

For those interested in a slice of one of the Middle East’s most hotly anticipated new residential developments, we encourage you to register your interest early in The Peninsula to avoid missing out.

Read more about The Peninsula development opportunities we have available.

Miami

Average rental yield: 8.33%

Average monthly wage (net): $3,936.80 (£2,963.72)

Average monthly rent (1 bedroom city centre apartment): $2,019.20 (£1,520)

Average property purchase cost per square meter (city centre): $5,438.67 (£4,091)

Miami in Florida is probably best associated with its sandy beaches, palm laden streets and many a world famous theme park. Hence, it’s an extremely popular destination for tourists as well as Americans who wish to live by the coast. 

Compared with Dubai, the average rental yields in Florida are only slightly less at 8.33%. 

However, the average purchase cost of property per square meter is significantly higher, equating to £4,091, when Dubai stands at £1,048 for the same category. This means property in Florida costs almost four times that of Dubai in terms of the average price per square meter.

Also consider that obtaining a visa to live in America is not as straightforward as with the UAE, which could prove challenging for any non-residents looking to invest here or even relocate here. 

Another point to note is that unlike Dubai which has a low crime rate, this is not the case in Florida. Numbeo users scored Florida as 46.90/100 for its overall safety index, whereas Dubai scored 83.65/100 in the same category. 

London

Average rental yield: 7.89%

Average monthly wage (net): £3,120

Average monthly rent (1 bedroom city centre apartment): £1,718

Average property purchase cost per square meter (city centre): £12,335

Rental yields are also extremely healthy in London, averaging at 7.89%. Despite various economic challenges over the past decades, the property market in London has retained its resilience, seeing year on year increases in the cost of both purchase prices and rent.

Indeed, here at Thirlmere Deacon we are not only based in London but have opportunities for investors here too, including our 98 Baker Street development, starting at £850,000

This leads us nicely onto our next point which is, as profitable as the London property market can be, the starting costs for investors are not as attainable as in Dubai, considering our Peninsula apartments can be purchased from £128,000. 

Hence, the Dubai property market is a lot more accessible for investors of all calibres, especially when it comes to the vastly lower purchase prices without having to compromise on rental yields. 

Top tip: Still want to invest in the UK, but can’t afford the high entry rates of the London Property Market? Thirlmere Deacon has buy-to-let, hotel room and student accommodation investment opportunities available in locations such as Liverpool, Manchester, Birmingham, Sheffield, Hull and Preston offering extremely attractive entry rates. Call us on 0203 950 7939 to

Los Angeles

Average rental yield: 5.52%

Average monthly wage (net): $5,578 (£4,203)

Average monthly rent (1 bedroom city centre apartment): $2,221 (£1,674)

Average property purchase cost per square meter (city centre): $9,002 (£6,784)

Famed for its connection to the entertainment industry, Los Angeles in California has some of the most expensive property anywhere in the world. There are even several TV shows that document the local real estate market here, including Million Dollar Listing Los Angeles.

But behind the glitz and glamour, California has recently seen a mass exodus of its population in the wake of the Covid-19 pandemic, with residents seeking cheaper costs of living in the likes of Tennessee and Texas. High rent costs averaging £1,674 for a one bedroom apartment and £3,344 for a three bedroom apartment are thought to be the main factor for the shift in attitudes, especially in the age of remote working. 

So while the average rental yield of 5.52% doesn’t look too shabby for investors initially, there’s growing uncertainty about the future of rent prices in Los Angeles which could affect the long term return on any investments. 

Compare this with Dubai that has seen its population grow exponentially, has low entry prices against high rental yields, not to mention lower living costs, and Los Angeles doesn’t look as bright for investors as it once did. 

New York

Average rental yield: 4.48%

Average monthly wage (net): $5,897 (£4,449.20)

Average monthly rent (1 bedroom city centre apartment): $3,020 (£2,278)

Average property purchase cost per square meter (city centre): $15,920 (£12,011)

Staying within the United States, and next up with a rental yield of 4.48%, New York fairs worse than Miami and Los Angeles for yields. However, New York does have some of the most expensive real estate anywhere in the world making the city an extremely profitable location for existing investors at least. 

When we turn our attention back to Dubai, average New York yields are less than half that of Dubai. In addition, the extremely high entry costs mean the New York real estate market is not nearly as accessible as property in Dubai.

Similar to the other locations we’ve featured in the US, there’s the small matter of securing an American visa which is more difficult than getting a visa in the UAE. In addition, the overall safety index in New York is 52.58/100, which although is slightly better than Miami, is still way below Dubai’s excellent 83.65/100 rating. 

Dubai Vs The Other Cities On Our List

  • Toronto – 3.93%
  • Milan – 3.46%
  • Berlin – 3.43%
  • Sydney – 2.88%
  • Singapore – 2.48%
  • Moscow – 2.47%
  • Paris – 2.27%
  • Seoul – 1.09%

To recap all of the cities on the lower half of the list, and surprisingly even the likes of Toronto, Berlin and Paris have average rental yields below 4%. Seoul fared even lower at just 1.09%. Once again, the majority of these locations are up against high purchase prices, which are pricing residents and investors alike out of the local property markets. 

Therefore where ROI is concerned, Dubai holds onto its crown for being one of the most accessible global cities to invest in, while also promising extremely high rental yields. Remembering also that Dubai also has exceptional build and finish standards which encourage longer tenancies not to mention overall investor satisfaction, and it’s clear Dubai should be a top consideration for any property investor. 

Dubai Property Investment

Thirlmere Deacon is a property investment group with offices in London and Dubai. If you’re interested in investing in the Dubai property market, you’re in the right place. 

We welcome potential investors to take a look at our current buy-to-let opportunities. Alternatively, scroll to the top of this page to view our investor resources to find our Dubai property investment page

We also have a YouTube channel where our team covers everything you need to know about property investment, as well as giving exclusive tours of our developments in the UK and the UAE. 

If you’d like any further advice on anything we’ve mentioned above, or if you are considering investing in one of our opportunities, please drop us a message or call us on +44 (0) 203 9507939. 

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