Yield Compression and Macroeconomic Drivers in Dubai Residential Market (2021–2025)

Abstract This paper examines the dynamics of yield compression in the Dubai residential real estate market between 2021 and 2025, focusing on the interaction between rental yields, property prices, and macroeconomic variables. Using regression-based empirical analysis, the study evaluates the extent to which rental yields are driven by changes in average sales prices per square meter and interest rate conditions, proxied by the EIBOR 1-year rate. The results indicate statistically significant yield compression over the sample period, primarily driven by rapid capital value appreciation rather than rental growth. The findings suggest that yield dynamics in Dubai during this period reflect capital-driven investment behavior and sensitivity to global monetary conditions. This research contributes to the literature on real estate finance, emerging market property cycles, and macro-financial transmission mechanisms by providing empirical evidence from a high-growth, globally integrated real estate market. Keywords: Yield compression; Dubai real estate; rental yields; housing prices; interest rates; EIBOR; real estate finance; macroeconomic drivers.