Crunching the Numbers: How Off-Plan Investments Add Up in Dubai

Curious about the numbers behind off-plan investments in Dubai? 🌆

If you’ve been wondering how flexible payment plans, rental income, and potential returns stack up, you’re in the right place! This week, we’re diving deep into the financials of a real off-plan opportunity—breaking down costs, projected returns, and when your investment could start paying you back.

Let’s dive into a sample calculation with an investment of 650,000 AED – this is where projects start to hit our quality standards and make it worth your while.

• Total Purchase Price: AED 650,000 (USD 176,967 or GBP 135,977)
• Total Paid by Handover: AED 513,500 (USD 139,803 or GBP 107,421)

This example calculation assumes a post-handover payment plan, which means payments continue for 24 months after you receive the property – a setup offered by many, but not all, projects. This arrangement can be a great option for spreading the investment over time, making it easier on your budget.

Break-even Point:

By Year 6, the total rental income will exceed the full investment, including all payments and additional costs. After the 6th year of renting, all expenses will be fully covered by the rental income, making the project fully profitable.

Payment Plan Overview

1. Immediate (including 4% fees): 24% = AED 156,000 (USD 42,472 or GBP 32,634)
2. During Construction (39 months): 54% = AED 351,000 (USD 95,562 or GBP 73,427)
3. Handover (expected Q4 2026): 1% = AED 6,500 (USD 1,769 or GBP 1,359)
4. Post Handover Payment (24 months): 25% = AED 162,500 (USD 44,241 or GBP 33,994)

By the time of handover (when you could start renting the property), you would have paid a total of AED 513,500 (USD 139,803 or GBP 107,421).

Rental Income (First 7 Years)

The initial rental yield is based on a conservative 15% annual increase, starting from AED 65,000 (USD 17,696 or GBP 13,597) in Year 1 and reaching AED 150,349 (USD 40,933 or GBP 31,452) in Year 7.

Cash Flow Analysis (First 2 Years)

In the first 24 months after handover, your monthly payment of AED 6,770 (USD 1,843 or GBP 1,416) totals AED 81,250 (USD 22,120 or GBP 16,997) per year, which exceeds the AED 65,000 (USD 17,696 or GBP 13,597) annual rent in Year 1. Therefore, there will be no net rental income in the first 2 years, and an additional AED 22,750 (USD 6,193 or GBP 4,759) will be required to cover costs.

Total Investment Including Shortfall: AED 536,250 (USD 145,997 or GBP 112,181)

­

Break-even Analysis

After 2 years, starting from Year 3, rental income will begin covering costs and generating profit. By Year 7, the total rental income will have reached AED 579,594 (USD 157,798 or GBP 122,057), fully offsetting the total investment, leaving no further obligations.

ROI for the First Years of Rental after Post Handover Paymentplan

• Year 3: 16.03% [(85,963 / 536,250) × 100]
• Year 4: 18.43%
• Year 5: 21.19%

‍

Capital Appreciation and Early Sale

This scenario does not factor in any potential capital appreciation. Should you decide to sell the property earlier, the financial outcome would vary significantly depending on the resale value. Most developers allow resale only after 40-50% of the payment plan has been completed. The exact terms depend on the developer, but this general threshold is a typical industry standard.

Get in touch today to see how a custom calculation could work for you!→

Looking forward to helping you explore new possibilities!

‍

‍

‍

‍

‍

‍

You might also like our previous Newsletter:

Invest with Confidence: Secure Off-Plan Opportunities in Dubai

Read the full newsletter here →

0% Financing, No Red Tape 🏖️: Discover Dubai’s Best-Kept Secret

Read the full newsletter here →

‍

‍