Investors are collecting very healthy returns, according to research by Astec. Rents in the region have gone up by nearly a quarter during the last 12 months, the largest increase in rental yields ever recorded in Abu Dhabi where demand is outstripping supply.
Figures show that occupancy rates in villas were close to 100 per cent, which led to average annual rents going up by more than half over the last year.
Meanwhile authorities in Abu Dhabi have outlined their plans to introduce more liberal economic policies. The government wants to overhaul the system in order to make the area even more attractive to potential investors.
Nasser Ahmed Al-Suweidi, chairman of the department of planning and economy, said this should also help to support small to medium-sized business in the region.
'The entire legal regime will be revamped to encourage the flow of investments to the emirate.' It is part of a five-year plan aimed at 'rapid and sustainable' growth.
Abu Dhabi was recently named as one of the top ten holiday destinations in the world by Expedia.co.uk.
And visitor numbers in Dubai are set to increase by about eight per cent, analysts have predicted. According to consultancy group Globalysis, the growth in tourism is set to be driven by the introduction of new airline routes.
Furthermore, the organisation believes that efforts to promote the destination overseas could also have a positive effect. This means that rental accommodation in prime locations is likely to be attract greater demand over the coming months.
'The performance of Dubai's travel and leisure sector in 2008 has been favourable and the outlook moving forward remains bright,' said Jason Pereira, senior associate at Globalysis.
This comes after Dubai Tourism and Commerce Marketing revealed that about seven million people booked temporary lodgings in the region last year. The organisation believes that by 2010, this number could increase to as much as ten million.
