Dubai South Emerges as a Top Investment Play with 7-9% Yields and Real Infrastructure
Studios and 1-bedroom apartments in Dubai South (formerly as Land District for Airport City) within the growing residential complex of Emaar South are offering some of the highest gross yields (7% – 9%) in Dubai today, backed by substantial transactional evidence in the recent and ongoing real estate sales activity as well as in the current rental income. We expect additional demand driven by employment generated by Al Maktoum International Airport once it becomes fully operational. Given the sheer number of employment opportunities to be created by the airport, residential demand is expected to become more floor-independent compared to the current market trends.
Dubai South is different from other areas for investment and that is why we classify it as an employment generation area. It has an Airport, the Al Maktoum International, which will be operational fully to employ tens of thousands of people in various professions, thus enabling a residential floor to be created that is not dependent on the speculative nature of other market areas and will allow a lifestyle of independent residential living as opposed to areas that are purely of a lifestyle of investment and would rely on other factors to sustain residential floor.
The Expo 2020 site has recently been redeveloped into Expo City Dubai – a commercial and event property which is designed to be a permanent installation in the city. This is an exciting property which will bring business visitors to the area as well as tenants to properties within the site. It is also hoped that serviced apartments within the area will be rented out on a short-term basis to visitors of the Expo. This new demand factor will certainly support rentals within the area.
The new development Emaar South which is located in the heart of the emerging business district of Dubai South is offering a lifestyle of golf at very affordable prices to the market with properties starting from AED 1.3m for a 3 bedroom townhouse up to AED 2.2m for a 4 bedroom townhouse. Prices for a similar property in comparable developments such as Dubai Hills or Arabian Ranches would be multiples of the asking price at Emaar South.
Note however that the infrastructure and the community in Dubai South is still evolving. To that end while Route 2020 metro is in operation, other means of public transport as well as shopping centers, hospitals, and other commercial outlets are few and far between compared to the more mature neighborhoods in Dubai and therefore a medium to long term holding strategy would be recommended to gain full appreciation of asset in question.
What This Means for Your Portfolio:
- The majority of yields for investments into properties at Dubai South are generated by studios and 1-bedroom apartments (yields between 7 and 9% gross in terms of rental income). Therefore, investors interested in an involvement into this real estate will be best served by searching for offers of said apartments.
- Go for properties that are a short walk to the Route 2020 metro. This will be a major pull for tenants in search of properties for rent in Dubai South, in particular, due to its growing rental market returns.
- Be sure to check the RERA registration and escrow account participation of the developer for any off-plan purchases in the area as the number of new projects in the area are very high.
- The Emaar South townhouses can provide a good ‘lifestyle at value’ investment but expect a medium to long term appreciation in value.
Final Thought:
Dubai South is a unique case study in terms of employment-led-growth, and immediate returns from investment. The real question is, can other emerging districts in Dubai develop similarly in terms of solid infrastructure, strong employment drivers, and affordable real estate?
