How return is built
Total return = (sum of net rent) + (sale price − purchase price − transfer costs). Refurbishment can add value beyond cycle appreciation.
Worked example — original 1BR, 5-year hold
Assumptions: purchase AED 1.4M, gross rent ~AED 75K (5.4% yield), net ~AED 50K, capital appreciation 3.5%/year. Sell year 5 ~AED 1.66M.
Original 1BR — 5-year return (AED, indicative)
| Purchase price | 1,400,000 |
|---|---|
| Net rent, 5 years | ~250,000 |
| Sale price | ~1,663,000 |
| Less transfer / agency | ~67,000 |
| Total return | ~446,000 |
| Approximate ROI | ~32% (5 years, ~5.7% annualised) |
Worked example — refurbished 1BR, 5-year hold
Assumptions: purchase AED 1.4M, refurbishment AED 250K year 1, refurbished gross rent AED 100K, net AED 70K from year 2. Year-5 sale at AED 2M.
Refurbished 1BR — 5-year return (AED, indicative)
| Purchase + refurb | 1,650,000 |
|---|---|
| Net rent, ~4 years | ~280,000 |
| Sale price | ~2,000,000 |
| Less transfer / agency | ~80,000 |
| Total return | ~550,000 |
| Approximate ROI | ~33% on total invested |
Trade-offs
Refurbishment requires capital and time but has higher absolute return ceiling. Yield-only path is simpler.