New Market Comparison 2024: Capital Appreciation and ROI in Dubai vs Global Cities

Investing in real estate involves understanding key metrics like capital appreciation and Return on Investment (ROI). Capital appreciation refers to the increase in property value over time, while ROI measures the profitability of an investment. This article compares Dubai’s real estate market with other major global cities, including Mumbai, in terms of these metrics.

1. Dubai

• Capital Appreciation: 5-7% annually.
• ROI: Rental yields typically range from 6-8%.

Example Calculation: For a property purchased at AED 1,000,000:

• Annual capital appreciation: AED 1,000,000 * 0.06 (6%) = AED 60,000
• Annual rental income (ROI at 7% yield): AED 1,000,000 * 0.07 = AED 70,000

2. New York

• Capital Appreciation: Approximately 3-5% annually.
• ROI: Rental yields range from 3-5%.

Example Calculation: For a property purchased at $1,000,000:

• Annual capital appreciation: $1,000,000 * 0.04 (4%) = $40,000
• Annual rental income (ROI at 4% yield): $1,000,000 * 0.04 = $40,000

3. London

• Capital Appreciation: Around 2-4% annually.
• ROI: Rental yields are typically 3-4%.

Example Calculation: For a property purchased at £1,000,000:

• Annual capital appreciation: £1,000,000 * 0.03 (3%) = £30,000
• Annual rental income (ROI at 3.5% yield): £1,000,000 * 0.035 = £35,000

4. Hong Kong

• Capital Appreciation: Historically 5-6%, but recently more volatile.
• ROI: Rental yields average around 2-3%.

Example Calculation: For a property purchased at HKD 10,000,000:

• Annual capital appreciation: HKD 10,000,000 * 0.055 (5.5%) = HKD 550,000
• Annual rental income (ROI at 2.5% yield): HKD 10,000,000 * 0.025 = HKD 250,000

5. Singapore

• Capital Appreciation: Generally steady at 3-4% annually.
• ROI: Rental yields are around 2-3%.

Example Calculation: For a property purchased at SGD 1,000,000:

• Annual capital appreciation: SGD 1,000,000 * 0.035 (3.5%) = SGD 35,000
• Annual rental income (ROI at 2.5% yield): SGD 1,000,000 * 0.025 = SGD 25,000

6. Mumbai

• Capital Appreciation: 3-5% annually, with significant variability across regions.
• ROI: Rental yields typically range from 2-4%.

Example Calculation: For a property purchased at INR 10,000,000:

• Annual capital appreciation: INR 10,000,000 * 0.04 (4%) = INR 400,000
• Annual rental income (ROI at 3% yield): INR 10,000,000 * 0.03 = INR 300,000

Summary

Dubai stands out for its relatively high capital appreciation and ROI, driven by a tax-free environment, strategic location, and robust economic growth. While other cities like New York and London offer stable markets, their returns are generally lower due to higher property costs and market maturity. Hong Kong and Singapore provide good capital appreciation but lower rental yields. Mumbai, a key market in India, offers competitive appreciation rates but lower rental yields compared to Dubai, making Dubai an attractive option for investors seeking high returns.

The comparison study highlights Dubai’s competitive advantage in the global real estate market, particularly in terms of ROI, making it an appealing destination for property investors.