In the Dubai real estate market, it is important to understand how to calculate the expected value of an off-plan property upon completion. A real estate agent specialising in off-plan property has developed a clear formula to help estimate returns and value. This method is applied to villas but is also useful for apartments.
The first step is to gather the basic data: the purchase price, the plot area, and the built-up area (BUA) of the property. The price is then divided by both the plot size and the BUA to calculate the price per m2 for each separately.
Comparison is Essential for a Realistic Estimate
The next step is to find six comparable properties within five to ten minutes of the new project. These reference projects should be at least as good as the new project or slightly less. For each reference, you recalculate the price per m2 based on the plot and BUA. This is essential because mortgage providers in Dubai primarily look at the BUA, not the number of bedrooms.
An example: a four-bedroom villa in the new project The Oasis costs 12 million AED, while a comparable villa in Acres costs 7.8 million AED. Despite the difference in price, the prices per m2 are comparable, meaning their value appreciation could follow a similar trajectory.
When calculating the expected return, you take the total of the expected sales price (calculated based on plot and BUA prices per m2) and divide it by two to arrive at an average expected value. You then subtract the purchase price from this to calculate the net profit.
Finally, you calculate the return on investment (ROI) by dividing the net profit by the invested capital (for example, 65% of the total for a 65% payment plan) and multiplying by 100.
This gives you an accurate estimate of the potential profit upon completion of the property.
Do you have more questions about this calculation? Please feel free to contact us.
Edward Clarke is a seasoned property expert with extensive experience in international real estate investment, with a particular focus on Dubai’s fast-growing property market. Drawing on both personal investment experience and years of client advisory work, he helps investors make informed, realistic decisions when purchasing apartments, villas or off-plan developments in Dubai. With a pragmatic mindset, a sharp focus on returns and a strong commitment to transparency, Edward is a trusted point of contact for anyone considering a property investment in Dubai.
