How return is built — capital-led case
Total return = (sum of net rent received) + (sale price − purchase price − transfer costs at exit). At Address tier, the net rent component is smaller, and the appreciation component carries more of total return.
Worked example — Address Residences 1BR, 5-year hold
Assumptions: purchase at AED 3M (typical 1BR), gross rent AED 135,000 (~4.5% yield), net rent ~AED 90,000 after service charges and other costs. Capital appreciation 4.5% per year (modestly above mid-tier reflecting brand premium). Sell year 5 at ~AED 3.74M, less ~4% transfer/agency.
| Purchase price | 3,000,000 |
|---|---|
| Net rent, 5 years | ~450,000 |
| Sale price (4.5% p.a.) | ~3,738,000 |
| Less transfer / agency at sale | ~150,000 |
| Total return | ~1,038,000 |
| Approximate ROI | ~35% (5 years, ~6.2% annualised) |
Worked example — Address Residences 3BR, 5-year hold
Assumptions: purchase at AED 7M (typical 3BR upper-floor), gross rent ~AED 320,000 (~4.6% yield), net rent ~AED 220,000 after heavier OA cost stack. Capital appreciation 4.5%. Sell year 5 at ~AED 8.72M, less 4% costs.
| Purchase price | 7,000,000 |
|---|---|
| Net rent, 5 years | ~1,100,000 |
| Sale price (4.5% p.a.) | ~8,722,000 |
| Less transfer / agency at sale | ~349,000 |
| Total return | ~2,473,000 |
| Approximate ROI | ~35% (5 years, ~6.3% annualised) |
Stress-tests
Flat-appreciation case: ROI compresses to net yield only — ~15% over 5 years. Down-cycle case: brand-tier buildings have historically held value better than mid-tier through cycle troughs, which floors the year-5 sale price closer to entry than mid-tier alternatives.