How return is built
Total return = (sum of net rent received) + (sale price − purchase price − transfer costs at exit). Yield is the steady contribution; capital appreciation is the variable upside or downside.
Worked example — Forte 1, 2-Bedroom, 5-year hold
Assumptions: purchase at AED 3.5M for a mid-floor 2-bedroom, gross rent ~AED 200,000/year, net rent ~AED 155,000 after OA, agent, maintenance and insurance. Capital appreciation modelled at 4% per year (within long-run Downtown range). Sell at year 5 at ~AED 4.26M, less ~4% transfer/agency.
| Purchase price | 3,500,000 |
|---|---|
| Net rent, 5 years | ~775,000 |
| Sale price (4% p.a.) | ~4,259,000 |
| Less transfer / agency at sale | ~170,000 |
| Total return | ~1,364,000 |
| Approximate ROI | ~39% (5 years, ~6.8% annualised) |
Worked example — Forte 2, 1-Bedroom, 5-year hold
Assumptions: purchase at AED 1.5M for an entry 1-bedroom, gross rent ~AED 86,000/year, net rent ~AED 67,000. Capital appreciation 4% per year. Sell year 5 at ~AED 1.82M, less 4% costs.
| Purchase price | 1,500,000 |
|---|---|
| Net rent, 5 years | ~335,000 |
| Sale price (4% p.a.) | ~1,825,000 |
| Less transfer / agency at sale | ~73,000 |
| Total return | ~587,000 |
| Approximate ROI | ~39% (5 years, ~6.8% annualised) |
Stress-testing for the cycle
Run two alternative scenarios. A flat case at 0% appreciation: total return collapses to yield only — ~22% over 5 years for either example, still positive but capital-flat. A "down year" case: rebase the year-5 sale at year-3 levels, accept that yield cushioned the holding period. Forte's above-average yield gives the model a relatively forgiving floor.