The first half of 2016 has left tenants in both Dubai and Abu Dhabi with cause for cheer. With rents adjusting downwards compared to the same period last year, many housing options across Dubai have become more affordable than they were in 2015. But homeowners did not feel much heat from falling rents in the first half, as yields remained at attractive levels in both the emirates.

Apartments in Dubai offered owners an average yield of six per cent in H1 2016 while those in Abu Dhabi returned seven per cent. Comparing results of H1 2016 with H1 2015, apartment rents in Dubai came down by six per cent on average, with average rents calculated at Dh131,000. However, apartment rents in Abu Dhabi were down a mere three per cent in H1'16 against H1'15, with average apartment rents hovering around the Dh135,000 mark.

Dubai

Studio apartments in Dubai commanded rents of Dh57,000 in the first half of 2016, adjusting seven per cent against H1'15. The average rent of 1-bed and 2-bed apartments in the emirate was calculated at Dh99,000 and Dh150,000, respectively, dipping by four per cent and six per cent. The average rent of 3-bed and 4-bed apartments adjusted six per cent each in H1'15. Average annual rent for the two categories remained Dh205,000 and Dh310,000 in the first six months of the year.

Studio and 1-bed apartments returned an average yield of seven per cent. The 2- and 3-bed apartments kept investors engaged with yields of six per cent and five per cent respectively, while the 4+ bed category returned three per cent in rental yields in H1' 16.

Bayut also ran a quarter-on-quarter analysis and again found apartment rents adjusting seven per cent on average at the end of Q2'16. The average rent of studio apartments in Dubai adjusted seven per cent in Q2'16 against average rent in Q1'16, while the rent of 1-bed apartments increased by one per cent. Bigger units like 2-bed and 3-bed apartments saw a five per cent and three per cent respective adjustment in rents, while the rent of 4+ bed category adjusted by five per cent in Q2'16.

Abu Dhabi

Average rents in the UAE capital faced a downward dip of three per cent. Studio apartments in Abu Dhabi cost an average of Dh63,000 to rent in the first half, posting a value increase of two per cent. One-bed apartments were rented out at an average of Dh97,000, the rates having dropped by one per cent compared to H1'15 value. The rents for 2-bed and 3-bed apartments averaged Dh136,000 and Dh181,000, respectively, posting a four per cent and two per cent decline in values.

The emirate's attractive rental yields continue to bring glad tidings for landlords and investors. Studio apartments offered a nine per cent yield on average, while 1-bed and 2-bed apartment categories followed with eight per cent and seven per cent respective yields. Larger options like 3-bed and 4+ bed apartments also attracted investors during the first six months of 2016 with seven per cent and five per cent rental return, in that order.

As per Bayut's Q2-on-Q1 comparison, average rents in the UAE capital grew by one per cent against values calculated at the end of Q1'16. Category wise, the rent of studio apartments in Abu Dhabi adjusted three per cent in Q2, but 1-bed, 2-bed and 3-bed apartment rents only adjusted one per cent each in the same period.

Regional security and political issues such as Brexit have ushered in an era of uncertainty that is making investors and home buyers delay their spending decisions in some cases. Still the UAE government's commitment to job creation, boosting the tourism sector and development of Expo 2020-related infrastructure remain continued drivers for the economy, helping attract human capital that is, in turn, keeping demand for affordable real estate options on the rise.

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