Top 10 Areas in Dubai for High Rental Yields

Dubai’s real estate market is renowned for offering some of the highest rental yields globally. For investors looking to maximize their returns, choosing the right neighborhood is crucial. Here’s a guide to the top 10 neighborhoods in Dubai where you can earn high rental yields:

1. Al Barari

Overview:

Al Barari is an exclusive, eco-friendly community known for its luxurious villas, high-end apartments, and abundant greenery. Situated away from the city’s hustle and bustle, it offers a serene living environment with extensive landscaping, themed gardens, and freshwater lakes. The area is ideal for those seeking a lavish lifestyle in a tranquil setting, with excellent amenities such as gourmet restaurants, a health and fitness club, and a spa.

Rental Yield: 8.30%

• Studio: AED 92,000/year
• 1-Bed: AED 158,000–240,000/year
• 2-Bed: AED 260,000–550,000/year
• 3-Bed: AED 485,000–950,000/year
• 5-Bed Villas: AED 850,000–4 million/year
• 6-Bed Villas: AED 1.1 million — 1.6 million/year

2. Za’abeel

Overview:

Za’abeel, strategically positioned between old and new Dubai, blends modernity with tradition. It includes sub-communities such as Al Kifaf, Za’abeel 1, and Za’abeel 2. The area is home to the iconic Za’abeel Palace and Za’abeel Park, offering residents proximity to both historic and contemporary landmarks. Its location near Sheikh Zayed Road ensures excellent connectivity, making it a preferred choice for professionals and families alike.

Rental Yield: 7.28%

• 1-Bed: AED 80,000/year
• 2-Bed: AED 120,000/year
• 3-Bed: AED 165,000/year

3. Dubai Marina

Overview:

Dubai Marina is a vibrant waterfront community renowned for its high-rise residential towers and luxurious lifestyle. Stretching along a 3.5 km man-made marina, it offers stunning views, a cosmopolitan atmosphere, and a plethora of dining, shopping, and entertainment options. Residents enjoy access to world-class amenities, including yacht clubs, marina promenades, and a variety of leisure facilities, making it a top choice for expats and tourists.

Rental Yield: 6.54%

• Studio: AED 50,000–69,000/year
• 1-Bed: AED 60,000–103,000/year
• 2-Bed: AED 85,000–155,000/year
• 3-Bed: AED 110,000–248,000/year
• 4-Bed: AED 300,000+/year
• 2-Bed Villas: AED 195,000/year
• 3-Bed Villas: AED 250,000–400,000/year
• 4-Bed Villas: AED 450,000–600,000/year

4. Dubai Hills Estates

Overview:

Part of the larger Mohammed Bin Rashid City project, Dubai Hills Estate is a master-planned community developed by Emaar and Meraas Holding. Nestled between Downtown Dubai and Al Barsha South, it spans over 2,700 acres and features luxurious villas, high-end apartments, and a championship golf course. Family-friendly amenities such as parks, schools, hospitals, and retail outlets enhance its appeal as a premier residential destination.

Rental Yield: 6.04%

• Studio: AED 59,000/year
• 1-Bed: AED 83,000/year
• 2-Bed: AED 146,000/year
• 3-Bed: AED 231,000/year
• 4-Bed Villas: AED 232,000/year

5. Jumeirah Golf Estates

Overview:

Situated along Sheikh Mohammed Bin Zayed Road, Jumeirah Golf Estates is a prestigious golf community offering luxurious villas, townhouses, and apartments. The area is centered around two championship golf courses, Earth and Fire, providing a lush green environment and world-class facilities. Its gated sub-communities, extensive amenities, and family-friendly atmosphere make it a highly desirable place to live.

Rental Yield: 5.98%

• 1-Bed Apartments: AED 70,000–120,000/year
• 2-Bed Apartments: AED 100,000–170,000/year
• 3-Bed Apartments: AED 165,000–220,000/year
• 2-Bed Villas: AED 240,000/year
• 3-Bed Villas: AED 199,000–365,000/year

6. Jumeirah Beach Residence (JBR)

Overview:

Jumeirah Beach Residence (JBR) is an iconic waterfront community featuring Mediterranean and Arabic architectural influences. Located along the Persian Gulf, it offers a pristine beachfront lifestyle with high-rise residential towers, luxury hotels, and a bustling promenade. Residents enjoy easy access to alfresco cafes, restaurants, retail outlets, and various leisure activities, making JBR a vibrant and sought-after destination.

Rental Yield: 5.82%

• Studio: AED 78,000–95,000/year
• 1-Bed: AED 92,000–135,000/year
• 2-Bed: AED 125,000–175,000/year
• 3-Bed: AED 180,000–265,000/year

7. Business Bay

Overview:

Business Bay is a dynamic mixed-use community situated along the Dubai Canal, adjacent to Downtown Dubai. Known for its fast-paced environment, it houses numerous commercial buildings, offices, and residential towers. The area attracts young professionals and families with its proximity to major business districts, upscale hotels, and a wide array of dining and entertainment options. Excellent connectivity via the metro and major roads further enhances its appeal.

Rental Yield: 5.72%

• Studio: AED 80,000/year
• 1-Bed: AED 120,000/year
• 2-Bed: AED 145,000/year
• 3-Bed: AED 210,000/year

8. Downtown Dubai

Overview:

Downtown Dubai, often referred to as the heart of the city, is home to iconic landmarks such as the Burj Khalifa, Dubai Mall, and Dubai Opera. This mixed-use development offers a blend of high-rise residential towers and low-rise historic buildings. Residents enjoy a luxury lifestyle with world-class amenities, premier shopping, fine dining, and cultural attractions all within walking distance. Its central location makes it a prime area for both living and investment.

Rental Yields 6.51%:

• Studio: AED 85,000/year
• 1-Bed: AED 132,000/year
• 2-Bed: AED 239,000/year
• 3-Bed: AED 407,000/year
• 4-Bed: AED 982,000/year
• 5-Bed: AED 1.18 million/year

9. Palm Jumeirah Apartments

Overview:

Palm Jumeirah is one of Dubai’s most iconic man-made islands, known for its luxury villas, high-end apartments, and stunning views of the Arabian Sea. The island is divided into the Crescent, Trunk, and 16 Fronds, each offering unique living experiences. Residents have access to private beaches, world-class hotels, upscale dining, and various recreational facilities, making it a symbol of Dubai’s luxury real estate market.

Rental Yield: 5.34%

• Studio: AED 93,000/year
• 1-Bed: AED 148,000/year
• 2-Bed: AED 197,000/year
• 3-Bed: AED 274,000/year
• 4-Bed: AED 647,000/year
• 5-Bed: AED 762,000/year

10. City Walk

Overview:

City Walk, developed by Meraas, is a modern urban community located in the heart of Jumeirah. It offers a blend of residential and commercial properties with a vibrant, upscale lifestyle. The area features a wide range of shopping, dining, and entertainment options, as well as contemporary apartments with high-end finishes. Its strategic location near Downtown Dubai and major transport links makes it a popular choice for those seeking a dynamic city living experience.

Rental Yield: 4.5% — 6%

• Studio: AED 42,000/year
• 1-Bed: AED 113,000/year
• 2-Bed: AED 156,000/year
• 3-Bed: AED 197,000/year
• 4-Bed: AED 330,000/year

Here’s the chart showing the top 10 neighborhoods in Dubai for high rental yields. The data illustrates that Al Barari leads with the highest rental yield at 8.30%, followed by Za’abeel at 7.28%, and Dubai Marina at 6.54%. This visual representation helps highlight the most profitable areas for real estate investments in terms of rental income.

Dubai offers a diverse range of neighborhoods that provide high rental yields, making it an attractive destination for real estate investors. Whether you are looking for luxury living in Al Barari, a bustling urban environment in Business Bay, or waterfront properties in Dubai Marina, there is a neighborhood to suit every investment strategy. Conduct thorough research and consider your investment goals to make the most of Dubai’s dynamic real estate market.

**Rates are current as of June-July 2024

FAQs

1. Are these rates calculated based on the unit cost excluding the mortgage?

Yes, the rental yield rates provided are typically based on the unit cost without considering mortgage payments. Rental yield is calculated as the annual rental income divided by the property purchase price, expressed as a percentage. This calculation assumes the property was purchased outright without a mortgage.

Example Calculation:

• Annual Rental Income: AED 120,000
• Property Purchase Price: AED 1,500,000
• Rental Yield: (120,000 / 1,500,000) * 100 = 8%

Key Points:

• Gross Yield: The figures given are gross rental yields, meaning they do not account for expenses such as maintenance, property management fees, or mortgage interest.
• Net Yield: To get a more accurate picture of profitability, investors should calculate the net yield, which subtracts operating costs from the annual rental income before dividing by the property price.
• Mortgage Considerations: If a mortgage is used to finance the property, the cost of the mortgage (interest and principal payments) would need to be factored in separately to assess the net returns on investment. This involves calculating the net rental income after mortgage payments and other expenses.

2. If I finance 50% of the property with a 25-year mortgage at an interest rate of 4.9%, what will my monthly mortgage payment be, and what will my rental yield be on the initial investment?

Calculating Mortgage Payment and Rental Yield on Initial Investment
Let’s assume the following details:

• Property Purchase Price: AED 1,500,000
• Down Payment (50%): AED 750,000
• Mortgage Amount (50%): AED 750,000
• Interest Rate: 4.9% per annum
• Loan Term: 25 years

We need to calculate the monthly mortgage payment using the formula for an annuity:

M=P×r(1+r)n(1+r)n−1M = P \times \frac{r(1 + r)^n}{(1 + r)^n — 1}M=P×(1+r)n−1r(1+r)n​

• MMM = Monthly mortgage payment
• PPP = Loan amount (AED 750,000)
• rrr = Monthly interest rate (annual rate / 12) = 4.9% / 12 = 0.004083
• nnn = Total number of payments (loan term in years \times 12) = 25 \times 12 = 300

Monthly Mortgage Payment Calculation

M=750,000×0.004083(1+0.004083)300(1+0.004083)300−1M = 750,000 \times \frac{0.004083(1 + 0.004083)^{300}}{(1 + 0.004083)^{300} — 1}M=750,000×(1+0.004083)300−10.004083(1+0.004083)300​

Rental Yield on Initial Investment

Assume the annual rental income is AED 120,000.

• Annual Rental Income: AED 120,000
• Initial Investment (Down Payment): AED 750,000

Rental yield on initial investment is calculated as: Rental Yield=(Annual Rental Income−Annual Mortgage PaymentInitial Investment)×100\text{Rental Yield} = \left( \frac{\text{Annual Rental Income} — \text{Annual Mortgage Payment}}{\text{Initial Investment}} \right) \times 100Rental Yield=(Initial InvestmentAnnual Rental Income−Annual Mortgage Payment​)×100

Step-by-Step Calculation

I’ll calculate the monthly mortgage payment and the rental yield on the initial investment.

Mortgage Payment Calculation

First, calculate the monthly mortgage payment:
r=0.004083r = 0.004083r=0.004083 n=300n = 300n=300
Using these values, we can calculate MMM:

M=750,000×0.004083(1+0.004083)300(1+0.004083)300−1M = 750,000 \times \frac{0.004083(1 + 0.004083)^{300}}{(1 + 0.004083)^{300} — 1}M=750,000×(1+0.004083)300−10.004083(1+0.004083)300​

Rental Yield Calculation

Then, calculate the annual mortgage payment and the rental yield:

Annual Mortgage Payment=M×12\text{Annual Mortgage Payment} = M \times 12Annual Mortgage Payment=M×12 Rental Yield=(Annual Rental Income−Annual Mortgage PaymentInitial Investment)×100\text{Rental Yield} = \left( \frac{\text{Annual Rental Income} — \text{Annual Mortgage Payment}}{\text{Initial Investment}} \right) \times 100Rental Yield=(Initial InvestmentAnnual Rental Income−Annual Mortgage Payment​)×100

Let’s perform these calculations.

Mortgage Payment and Rental Yield on Initial Investment

Monthly Mortgage Payment

Given the property purchase details:

• Property Purchase Price: AED 1,500,000
• Down Payment (50%): AED 750,000
• Mortgage Amount (50%): AED 750,000
• Interest Rate: 4.9% per annum
• Loan Term: 25 years

The monthly mortgage payment is calculated to be approximately:

Monthly Mortgage Payment=AED4,340.84\text{Monthly Mortgage Payment} = \text{AED} 4,340.84Monthly Mortgage Payment=AED4,340.84

Annual Mortgage Payment

The annual mortgage payment, calculated from the monthly payment, is:

Annual Mortgage Payment=4,340.84×12=AED52,090.08\text{Annual Mortgage Payment} = 4,340.84 \times 12 = \text{AED} 52,090.08Annual Mortgage Payment=4,340.84×12=AED52,090.08

Rental Yield on Initial Investment

Assuming the annual rental income is AED 120,000, the rental yield on the initial investment (down payment) is:

Rental Yield=(AED120,000−AED52,090.08AED750,000)×100=9.05%\text{Rental Yield} = \left( \frac{\text{AED} 120,000 — \text{AED} 52,090.08}{\text{AED} 750,000} \right) \times 100 = 9.05\%Rental Yield=(AED750,000AED120,000−AED52,090.08​)×100=9.05%

Summary

• Monthly Mortgage Payment: AED 4,340.84
• Annual Mortgage Payment: AED 52,090.08
• Rental Yield on Initial Investment: 9.05%

Investing in a property in Dubai with these parameters can provide a substantial rental yield on your initial investment while allowing you to build equity over time.