Looking at the yields versus the monthly rents for one bedroom apartments in the all the Dublin regions for quarter four of 2015, it can be seen that the rents ranged from €888 for North County Dublin to €1,480 for Dublin 4, while yields ranged from 5.7% for Dublin 6 up to 10.5% for Dublin 10.
Dublin County was divided into 25 areas corresponding with the postal districts plus North, South & West Dublin and we were attempting to see what relationship exists if any between the amount of monthly rent paid and the yield generated for the owner.
The yield is the gross figure and can be directly related back to the price of the property by calculating the annual rent and multiplying this by the multiplier which is calculated by dividing 100 by the yield e.g. take the one bedroom apartment in Dublin 1 with a monthly rental of €1,141 multiply by 12 to give €13,692.
It has a yield of 8.7% which gives a multiplier of 100/8.7 = 11.49. This will then give a property price of €157,379.
The lowest eight areas in terms of yields which all have yields of less than 7% are also the eight most expensive areas to rent properties in. At the other end of the market 6 of the top 7 areas in terms of yield all over 8.8% are to be found amongst the eight cheapest areas to rent.
So I can safely conclude that the highest yields most certainly do not correlate with the most expensive areas and if yield is your sole motivation for an investment then the cheaper areas should be targeted.
Of course there are other factors to be taken into account before investing such as risk and capital appreciation but prestige areas do not equal high returns.
Below is a graph below of the typical monthly rents for each of the 25 areas mapped against the typical yields for those areas. What you can deduce (in part) is that where yield is higher than rents that you are getting more bang for your buck.
Today’s blog was a guest post.