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Rental yields for prime residential properties in Dubai are higher compared to other safe havens such as London, thus attracting income-seeking investors, according to a UK-based real estate consultancy.

“While the Dubai residential price fall continues to significantly outpace rental value declines, initial yields are growing,” Diaa Noufal, Associate Partner – Mena Research, Knight Frank, said in a report.

Yield returns, as a first-hand result to such sale-rent combination, have strengthened over the same period with a 9.9 per cent increase to reach 7.42 per cent in Dubai mainstream market in July 2015.

Residential prices have dropped around 12.2 per cent over 12 months to June 2015, while decline of mainstream rental rates has been cooling down over the same period at a low rate of 1.2 per cent.

In key employment hubs, such as Dubai and London, where home ownership is beyond the reach of many workers, the increasing mobile and flexible workforce has led to rising demand for rented property.

Looking at the UK market, between January 2009 and June 2015, mainstream residential prices in London have increased around 71 per cent, dubbing the city as a ‘safe haven’ for capital investors in the aftermath of the global financial crisis.

However, growth of sale prices has cooled down lately due to waning demand to reach four per cent on a year-on-year basis in June 2015.

On the other hand, rental rates have been increasing at a rate of 3.8 per cent year to June 2015 in London.

As a thumb rule, mainstream yield returns are usually stronger than those produced by prime segment properties.

As mainstream property rental yields stands at around 4 to 4.5 per cent in London (June 2015), prime segment yields are approximately 3 per cent.

In return, low prime property yields combined with hiking prices have pushed prime property seekers to look afield towards London’s periphery market and beyond to regional cities such as Birmingham, Manchester and Bristol where yields are better holding up.