Please don't let the payment plan hype cloud your judgment

There's going to be a lot of noise the next few days around Sobha, Imtiaz, Object 1, Azizi and others rolling out 20/80 offers. A few things worth keeping in mind before you get swept up.

1. A great payment plan doesn't turn a bad investment into a good one. It just helps your cashflow. Don't chase a project because the payment plan is attractive. The fundamentals still matter: developer track record, location, and entry price (not payment) are the most important factors

2. If you're looking at anything above AED 5M and planning to mortgage the remaining 80% at handover, do note that LTV for properties above AED 5M is typically 70-75% for UAE residents on a first property. Budget for the extra 5-10% you'll need to bridge that gap, because the bank isn't covering the full remaining balance.

3. Check when you can actually get the No objection certificate (NOC) to resell. Off-plan resale volumes are low precisely because most buyers aren't willing to front 30-40%+ out of pocket. They rather wait for handover and get a mortgage. A 20/80 payment structure does not mean your NOC eligibility kicks in at 20%. Don't assume and ask your broker and developer.

To be clear, I've never encouraged flipping. We all know about the upcoming supply and the slowdown in the market. Only buy because you believe in the project and can genuinely afford it and not because the payment plan is great.

The one project that I would actually consider: Sobha Sanctuary townhouses and villas. Some people don't like the location or think the pricing is steep. I disagree. Only 2,200 units, 60% green space, BUA above 3,000 sqft and plot sizes close to 3,000 sqft for the 4BR + maid townhouses, those make it a genuinely strong product. This is one end users will appreciate once the community is handed over.

There is a lot of nonsense which I hear from people. Some are misinformation while others are just bad strategy.

Post done by me and structured by my trusty editor, Claude.

Here are the 3 Dubai real estate myths I keep hearing that need to be corrected.

**"Investment in Dubai is tax free"**

This depends entirely on your tax residency and nationality. If you're American, you're taxed on global income regardless of where it's earned. Dubai not taxing you doesn't mean the income escapes taxation, it just means the liability shifts back to your home country. You can structure your investment to reduce exposure, but the blanket claim that Dubai property is tax free ignores how most home country tax systems actually work. Know your own jurisdiction before you plan around this.

**"Buy in Dubai on a payment plan and flip it"**

This is the one that concerns me most. I have seen people pitch the 40/60 payment plan as a flip strategy, pay 40%, sell before handover, pocket the difference. Property is not an option contract. You do not profit from short term volatility in the Dubai market because there usually is not any to profit from. Real estate is a mid term hold at minimum, and it exists as an asset because people need somewhere to live, not because a chart moved.

**"Dubai property prices are about to spike because of rising construction costs"**

Partly true, but more nuanced than the headline suggests. Yes, steel and other material costs are up due to global supply disruptions. But developers in Dubai do not get to pass that straight through to buyers, sale prices are set by demand and supply, not by developer cost structures. Developers absorb a chunk of that increase through thinner margins. The more likely outcome is not a price spike, it is a slowdown in new launches, since higher costs make marginal projects less viable. Given how much of the current risk in this market comes from oversupply, a slowdown in launches would actually be a healthy correction.

These are the three I hear most often from clients and online. What is one you would add to the list?

Posting as: Agent

Developer: Nakheel

Property type: Townhouse

Area/community: Jebel Ali Village

Building/project: Jebal Ali Village

Price: Aed 236,000 for 3 bedroom townhouse

Bedrooms: 3 to 4

Size (sq ft): from 2,872 to 3,400

Furnishing: Unfurnished

Available from: Immediately

Cheques: Multiple cheques

Fantastic opportunity to move in Jebel Ali Village. great layout and quality by Nakheel, and the best thing is, they accept multiple cheques.

Posting as: Agent

Property type: Villa

Preferred area: Arabian Ranches 3 - Caya or Elie Saab

Budget: AED 310,000/year, 4 cheques

Bedrooms: 4

Preferred size: 4000+ sqft

Timeline: viewing to be arranged on 8th/9th August.

Client moving out from The Villa and looking to move to AR3

Happy to work with both owners and agents

Posting as: Agent

Property type: Villa

Preferred area: Arabian Ranches 3 - Caya

Budget: AED 280,000/year, 4 cheques

Bedrooms: 4

Preferred size: 4000+ sqft

Timeline: viewing to be arranged on 8th/9th August.

Client moving out from The Villa and looking to move to AR3 Caya.

Happy to work with both owners and agents

Posting as: Agent

Property type: Villa

Preferred area: Arabian Ranches 3 - Caya

Budget: AED 280,000/year, 4 cheques

Bedrooms: 4

Preferred size: 4000+ sqft

Timeline: viewing to be arranged on 8th/9th August.

Client moving out from The Villa and looking to move to AR3 Caya.

Happy to work with both owners and agents

Posting as: Agent

Property type: Villa

Preferred area: Arabian Ranches 3 - Caya

Budget: AED 280,000/year, 4 cheques

Bedrooms: 4

Preferred size: 4000+ sqft

Timeline: viewing to be arranged on 8th/9th August.

Client moving out from The Villa and looking to move to AR3 Caya.

Happy to work with both owners and agents

Posting as: Agent

Property type: Villa

Preferred area: Arabian Ranches 3 - Caya

Budget: AED 280,000/year, 4 cheques

Bedrooms: 4

Preferred size: 4000+ sqft

Timeline: viewing to be arranged on 8th/9th August.

Client moving out from The Villa and looking to move to AR3 Caya.

Happy to work with both owners and agents

Hello everyone

Once in a while, I see a post or comment saying there is no point investing in real estate because the net yield is around 6%, while you can place the money in a bank and earn a guaranteed 6.25%. The argument is that real estate carries more risk while producing a lower return.

However, this confuses rental yield with total return, so I want to walk through the difference properly.

Assumptions

The 6% net rental yield used below is assumed to be net of service charges, maintenance and normal vacancy allowance, but before mortgage payments.

Selling costs on exit are excluded to keep the example simple. Including them would reduce the property result, particularly over a five-year holding period.

The mortgage rate and bank-deposit rates are both held constant throughout the model for comparability, although neither is guaranteed to remain unchanged for 15 or 25 years in the real world.

The setup

Assume you purchase an AED 2 million property and finance 60% of it with a mortgage.

• Mortgage: AED 1.2 million
• Interest rate: 4.25%
• Tenure: 25 years
• Down payment: AED 800,000
• DLD fee: AED 80,000
• Agent commission: AED 40,000
• Total initial cash outlay: AED 920,000

For simplicity, assume you refinance at the same rate whenever the fixed-rate period ends.

1. Debt coverage

Ideally, the rental income should cover the mortgage with a reasonable buffer.

The property generates AED 120,000 per year in net rental income. The mortgage payment, amortised monthly, is approximately AED 6,501 per month, or AED 78,010 per year.

That gives a debt-service coverage ratio of:

AED 120,000 ÷ AED 78,010 = 1.54

That is a healthy buffer.

The 6% net yield already includes a normal vacancy allowance, but an unexpectedly long vacancy beyond that assumption would reduce the return further.

2. Return on the cash invested

People often compare the 6% property yield directly with the 6.25% bank rate.

However, the 6% yield is calculated against the property’s full AED 2 million value. It is not the return on the AED 920,000 of cash you invested.

Here is the first-year cash flow:

• Net rental income: AED 120,000
• Mortgage payments: AED 78,010
• Interest portion: approximately AED 50,468
• Principal repayment: approximately AED 27,543
• Cash remaining: AED 41,990

The AED 41,990 cash surplus represents a 4.56% cash return on the AED 920,000 invested.

That is below the 6.25% bank rate, and it is worth stating that plainly.

However, the AED 27,543 of principal repayment is not an expense in the same way as interest. It reduces the amount owed to the bank and becomes additional equity in the property.

That represents another 2.99% return on the initial AED 920,000.

Assuming the property also appreciates by 1% during the year, that adds AED 20,000, equivalent to another 2.17% on the initial cash invested.

The first-year total economic return is therefore approximately:

4.56% cash return + 2.99% principal repayment + 2.17% appreciation = 9.73%

Only the first 4.56% is immediate cashflow. The rest is equity being built inside the property and can only be accessed by selling or refinancing.

The risks

So now the return looks great, but the higher expected return does not come without additional risk.

1. Illiquidity

You generally realise the equity portion of the return only when you sell or refinance.

In a slow market like today, selling can take time and may require accepting a lower price than expected.

2. Vacancy and rental restrictions

Although the model includes a normal vacancy allowance, a prolonged vacancy would mean paying the mortgage from your own pocket.

You may reduce vacancy risk by pricing slightly below comparable properties, although that lowers your immediate rental return.

Once a tenant is in place, Dubai’s renewal rules may also limit how quickly the rent can be increased. If market rents rise faster than the permitted increase, you may not be able to immediately reset the existing tenant’s rent to the new market level.

3. Leverage also magnifies losses

A 1% decline in the property’s value means an AED 20,000 loss, equivalent to approximately 2.17% of the initial AED 920,000 cash outlay.

Moving from the assumed 1% gain to a 1% loss creates a total swing of approximately 4.35% against the initial cash invested.

Longer-term comparison

The following comparison uses the same AED 920,000 starting capital for all three strategies.

For the property scenario, the figures represent:

• the property’s market value
• minus the outstanding mortgage
• plus accumulated rental cash flow after mortgage payment

The rental surplus is reinvested at 6.25%, the same rate used for the bank deposit. Rental income remains constant at AED 120,000 per year, with no rental growth assumed.

Selling costs are excluded.

Strategy	Year 5	Year 10	Year 15
Bank deposit at 6.25%	AED 1,245,755	AED 1,686,853	AED 2,284,136
Equities at 7%	AED 1,290,348	AED 1,809,779	AED 2,538,309
Leveraged property with 1% appreciation	AED 1,290,083	AED 1,905,087	AED 2,683,489

Property and equities are effectively tied at year five.

Property then moves ahead by year ten and remains ahead at year fifteen under these assumptions.

However, leverage takes time to show up. It is not a shortcut, and including exit costs would reduce the property figures further, particularly over the shorter five-year period.

Conclusion

Whether property is worthwhile depends on your risk tolerance, investment horizon and objectives.

Leveraged property has the potential to outperform an unleveraged equity investment over a sufficiently long holding period. However, that outcome depends heavily on financing costs, occupancy and appreciation actually materialising.

It is not guaranteed, and it is not instant.

The main point is this:

Rental yield measures the income generated by the entire property. It does not, by itself, measure the total return earned on the investor’s cash after leverage, principal repayment and appreciation.

As usual, just sharing and happy to hear views.

Do note that this is a simplistic model, just to showcase how returns are when leverage is used.

Hello everyone

Just want to share some information on checking the supply in an area or with an individual project.

You can do this yourself for free using dxbinteract and the Dubai rest app.

1. Check the Area Supply (The Macro)

Go to DXB Interact, under "More", select "Area Analysis" and look at how many units are finished versus how many are coming. Here are some examples:

• Dubai South: Has about 9,400 completed units, but 40,000 units are coming in the next 5 years. If you do not believe in the growth story of the South, then this is an area you should avoid.
• JVC: Has about 38,000 ready units and 35,000 coming. A very big pipeline, and one reason why there are continual objections to investing in JVC.

Do note that I have just selected Dubai South and JVC as examples, and not talking about their specific investment potential, or reasons to avoid these areas.

2. Check the Project Supply (The Micro)

Once you know the area, zoom into the project itself on the Dubai REST app to check the unit breakdown. Under Dubai REST app, select services, "Information/Inquiries" and "Project Status Enquiry". Type in the name of the project.

Look at a project like Sobha Central. If you check Dubai REST, you will see it has around 6,500 total units. This is massive.

If you look closer at the breakdown: around 4,000 of those are 1-bedroom apartments (62%).

If you buy a 1-bed there to sell upon handover or rent, ask yourself:

• What is your exit plan?
• When it hands over, you are competing with thousands of people trying to sell or rent the exact same layout in the exact same spot.
• Why would someone choose yours? How long will it take for the market to absorb that many identical units?

TL;DR

Not all areas are built equal; look at where the supply is coming. Open DXB Interact and the Dubai REST app. Check the total supply in the area, look at the unit breakdown in the building, and make sure you aren't buying a unit type that has 4,000 identical clones competing with you on handover day.

Hello everyone

Due to recent performance with Ellington, my team has been given exclusive access to a full high floor for Eltiera Views 1.

This is a direct allocation and the pricing on these specific units is actually lower than the standard higher-floor units in the building.

Direct Allocation Pricing:

• 1 Bedroom: From AED 2.2M
• 2 Bedroom (Skyline View): From AED 3.1M
• 2 Bedroom (Jumeirah Islands View): From AED 3.4M
• 3 Bedroom (Jumeirah Islands View): From AED 4.4M

Addressing the Elephant in the Room: Eltiera Views vs. Upper House

The question that is usually asked is, “Why pay AED 2.2M for a 1-bed here when Upper House is right behind it and you can get 1-beds at AED 1.6M?”

It’s a fair question, but the two projects are positioned completely differently.

It is similar to Emaar’s strategy in Dubai Hills Estate. Emaar sells 90% of the standard inventory but we do have premium buildings, the ones directly facing the park with elevated amenities, which command a massive premium because they cater to a different buyer.

• The Views: Unlike Upper House, most units on this floor have completely unobstructed, front-row views of the Jumeirah Islands
• The Podium & Amenities: The podium design, lifestyle offerings, and level of finishing are scaled up significantly compared to standard JLT projects

Performance of the hotel branded residence, such as Banyan Tree and SO/UPtown showcases that there is a ready market for such a product.

If you want the exact floor plans, prices, specific payment plan breakdown, drop a comment below or send me a DM. I will share the layout configurations directly.

Posting as: Agent

Property type: 4 bedroom townhouse

Preferred area: Mudon or Damac Hills 1

Budget: AED 180000

Bedrooms: 4

Preferred size: Above 2,400 sqft

Timeline: Move in within 2 weeks

Additional requirements: Modern corner townhouse. Furnished or unfurnished. Up to 4 cheques. A2A will be signed.

Hello,

My client is currently in Dubai and is looking to move within 2 weeks.

He's looking for a modern 4 bedroom corner townhouse in either Mudon or Damac Hills 1.

If you have a suitable unit, please let me know. Open to both owners and agents. A2A will be signed.

Thank you.