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BTL: Time to look to the Middle East?

Jaimie Kanwar

As US and European housing markets slow, investors are looking further afield...

Dubai, the richest and most progressive emirate of the United Arab Emirates (UAE), started it all. In 2002, Dubai announced that foreigners of any nationality would be able to own freehold residential titles, instead of the originally-proposed leasehold titles. Soon other countries in the Persian Gulf followed suit, including Bahrain, Qatar and Oman.

Some investors still shy away because of the perceived political and security risks. However, good rewards await those willing to do their homework and explore the market. Since the Gulf's 'for foreigners' market is still at its infancy, most properties sold to foreigners are off-plan. This has advantages and disadvantages.

One advantage is that the buyer saves on the real estate agent's fee and legal fees, and the developer takes care of the property transfer procedure. In most cases, the developer also takes care of all maintenance and utilities like water, telephone and electricity connection.   

The table below illustrates how rental yields in the Middle East are outshining those in other parts of the world:

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Costs and Rental Yields of Properties
Properties are 120 sq. m. condominiums, in a major city center
City, Country	Price per sq. m. (US$)	Monthly Rent (US$)	Rental Yield
Cairo (Maadi), Egypt*	406	576	11.35%
Amman, Jordan	1,261	1,213	9.62%
Istanbul, Turkey	1,356	1,094	8.07%
Dubai, UAE	4,066	3,140	7.72%
Marrakech, Morocco	1,973	1,511	7.66%
Beirut, Lebanon*	1,237	1,154	7.46%
Cairo (Zamalek), Egypt*	732	616.5	6.74%
Tel Aviv, Israel	5,021	3,083	6.14%
Tunis, Tunisia	2,667	1,500	5.63%
London, UK	24,250	12,989	5.36%
New York, US**	15,933	7,976	5.01%
Cape Town, South Africa	2,784	1,221	4.39%
Paris, France	13,826	5,560	4.02%
Mumbai, India	10,222	3,380	3.31%
Barcelona, Spain	7,021	1,883	2.60%
* Based on 150 sq. m. apartments  ** Upper Manhattan

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