Dubai Residential Property Market Monitor In focus: cap rates

[Audio] Today we are presenting to you June 2023 version of Dubai Residential Property Market Monitor. Cap rates is the core topic of this report..

[Audio] Dubai Residential Property Market is showing continued strength in 2023. Prices and volumes keep strong levels achieved in 2022. At the same time, cap rates are quite different by area and project. In this presentation we will analyze rental yields trends and deep dive into the most profitable projects. Before we start let us give you a brief definition. Cap rate or rental yield is calculated as Long-term rent divided by sales price. Cap rate is calculated before any costs, fees and taxes. Please note that cap rate of a project can be calculate only when the project is completed, and some apartments are rented..

[Audio] Our agenda for this presentation is the following: Top Dubai areas by cap rate Deep dive into top-3 areas by cap rate Top Dubai projects by cap rate Deep dive into top-3 projects by cap rate, including trends for sales prices and rent.

[Audio] On this slide you can see average cap rates by Dubai area. The highest cap rate is in Al Khail Heights at 12.1% level, the lowest is in Jumeirah Beach Residence at only 4.7% And there are plenty of areas with average cap rate above 8%..

[Audio] Here are top-15 areas in Dubai by cap rate with average sales prices and long-term rents. On the next slides we describe the first three of these areas: Al Khail Heights, Liwan and Jumeirah Village Triangle..

[Audio] Al Khail Heights is a residential complex in Al Quoz 4, Dubai. It consists of 58 townhouses and 26 apartment buildings. The project was launched in 2013, and handovers began in late 2015. It is located not far from major residential and commercial districts, including Downtown Dubai, Business Bay and DIFC. Low price and low rents per sqm and high cap rate compensate necessity to use a car or a bus to get in and out..

[Audio] Liwan is a freehold mixed-use development in Dubai, located on the eastern side of the district, near Dubai Silicon Oasis. It was launched by Dubai Holding in 2006 and covers an area of 13 million sq. ft. The development comprises 100 separate residential complexes, six 'iconic' towers for business activities, a variety of mixed-use units, and two hotels. It's quite far from the center, and this is compensated by one of the lowest prices per sqm and high cap rates..

[Audio] Here are some of the pros and cons of living in Jumeirah Village Triangle: Pros: Spacious villas and townhouses with large gardens Family-friendly community with plenty of parks and playgrounds Easy access to major highways and public transportation Up-and-coming area with new developments Cons: Close to high voltage electric lines Can be quite spread out, so it can take long to get around Far from popular areas Limited public transportation options in some parts of the area.

[Audio] On this slide you can see average cap rates by Dubai projects. The top cap rate is in Reva Residences project in Business Bay at 13.5% level, the lowest in The Address Dubai Opera in Burj Khalifa at 3.7% And again, there are plenty of areas with average cap rate above 8%..

[Audio] Here are top-15 projects in Dubai by cap rate with average sales prices and long-term rents. On the next slides we will describe the first three of these projects which we haven't described in the areas section: Reva Residences in Business Bay, Lincoln Park in Arjan and The Spirit in Dubai Sports City..

[Audio] Reva Residences is a high-rise residential development in Business Bay, Dubai. It comprises two towers, Reva Residences and Reva Heights, with a total of 842 apartments. Apartments range in size from studios to three-bedrooms, and all have balconies or terraces. Reva Residences is a luxurious development with a variety of amenities, including a swimming pool, gym, spa, and rooftop terrace with views of the city. The project is also well-connected, with easy access to public transportation and major highways. Some cons of living in Reva Residences: Small apartments in some cases Limited parking.

[Audio] Developed by DAMAC Properties, Lincoln Park, Dubai is a residential apartment complex in Arjan. It is a mixed-use development project that consists of both commercial and residential buildings. The development is inspired by the architectural styles of Chicago and features low-rise residential buildings with ornamented front entrances, domed windows, and beautiful terraces..

[Audio] The Spirit is a 19-storey residential development in Sports City, Dubai. It was developed by The First Group and completed in 2013. The project comprises a total of 386 units, including studios, one-bedroom apartments, and two-bedroom apartments. The Spirit is located in a prime location in Sports City, close to a number of amenities, including the Dubai Sports Complex, the Dubai Tennis Stadium, and the Dubai International Cricket Stadium. The project is also well-connected to public transportation, with easy access to the Dubai Metro and the Dubai Tram. The Spirit offers a variety of amenities, including a swimming pool, a gym, a rooftop terrace, and a 24-hour security..

[Audio] On this slide you can see the history of Cap rate, sales price and rents for Reva Residences in Business Bay. As you can see, a jump in rental rate upgraded cap rate to 13.5%. You can see more detailed historical data on our website PropertyMakler.com.

[Audio] On this slide you can see the history of Cap rate, sales price and rents for Lincoln Park in Arjan. As you can observe, cap rate stays above 10% in 2023 and has reached 13.2% in May 2023..

[Audio] On this slide you can see the history of Cap rate, sales price and rents for Al Khail Heights project and area. As you can see, rental rate experienced decrease since January 2023 which pushed down cap rate to 12.1%. Which we should notice is still a high level..

[Audio] On this slide you can see the history of Cap rate, sales price and rents for The Spirit in Dubai Sports City. The key message here is that growth in rental rates brought cap rate to a record high of 12.0%..

[Audio] As Richard Branson once said, Business opportunities are like buses. There's always another one coming. Property market appreciates patience and attention to details. It makes sense to invest time to study the property market and its trends before you make a deal. We hope you our presentation helped you to identify the most profitable areas and projects..

[Audio] This analysis is based on the data available as of June 1, 2023 More analysis and project-level data can be found on our website PropertyMakler.com.