ROI analysis of apartment in THE PAD: DLD data and real deals

1. Definition of the area and data structure

Actual location: according to DLD, THE PAD is located in Business Bay, with Business Bay also being the master project.

In the DLD database, there are 392 recorded sales transactions and 552 rental contracts for THE PAD (all apartment types), which allows for a detailed analysis of both the building itself and the wider area for comparison.

2. Liquidity and deal structure

The sales dynamics at THE PAD show consistently strong activity: over the past three and a half years, 50–130 transactions have been completed annually. The large volume of rental contracts also confirms that the building is in high demand on the market.

Business Bay as a district is traditionally characterised by very high liquidity, which is confirmed by the volume of sales and rental contracts — thousands of transactions are concluded across the area every year.

3. Sale price dynamics per m²: building vs area

As of Q2 2024, the average asking price for 2-bedroom apartments in THE PAD over the last 12 months is around AED 22,800/m². Across Business Bay as a whole, the average price per m² for apartments over the same period is AED 25,700/m².

Looking at the dynamics over the last 3–4 years:
– In THE PAD, the average price per m² for 2-bedroom units has been quite uneven: in 2021–2022 prices were in the range of AED 10,000–17,000/m², followed by growth and higher volatility: in 2023–2024 average quarterly values fluctuated between AED 13,000 and 30,000/m², with 2024 highs reaching AED 30,000/m².
– In Business Bay, the average apartment price level has been growing steadily: from ~AED 15,000/m² in 2020 to >AED 24,000–25,000/m² in 2024.

Thus, THE PAD is currently trading slightly below the district average for apartments, although there are individual transactions/quarters where it shows a premium to the area.

4. Rental rate dynamics

Rental rates across the building have been steadily rising from late 2021 (~AED 900–1,000/m²/year) to 2023 (AED 1,350–1,550/m²/year), and in the latest quarters of 2024 the average rate for all apartments in THE PAD is AED 1,630/m² per year. When trying to isolate only 2-bedroom units over the last 12 months, it was not possible to obtain a statistically valid average rate (too few or no confirmed contracts for this layout in the period).

For Business Bay as a whole, the average operational rental rate per m² over the last 12 months is AED 1,330, which is noticeably below the level of THE PAD (a difference of about 20–22% in favour of the building).

If we look at the quarterly dynamics, rental rates in the district have grown from around AED 700–900/m² in 2020–2021 to more than AED 1,300/m² in 2024.

5. Comparison of returns (ROI) for the building and the area

It was only possible to correctly calculate the return (ROI) at the level of the entire building (all apartments), since for the specific segment of 2-bedroom units in THE PAD there were either no rental contracts in the DLD over the last 12 months, or too few to provide reliable statistics.

– ROI_brutto for THE PAD (for the entire pool of apartments, based on the average rental rate per m² and the transaction price over the last 12 months): 1,628 / 22,815 ≈ 0.0714 (7.1%).
– ROI_brutto for Business Bay: 1,331 / 25,736 ≈ 0.0517 (5.2%).

After adjusting for transaction costs (7–8%), the effective net annual yield when purchasing an apartment in THE PAD will be in the range of 6.6–6.7%. For Business Bay as a whole, the comparable calculated “net” yield is around 4.8–4.9%.

6. Assessment of a “fair price” for an investor

To achieve a net yield of 7–8% per annum (the benchmark for most investors), the fair price range for THE PAD would be:
– at 7% yield: 1,628 / 0.07 ≈ AED 23,260/m²,
– at 8% yield: 1,628 / 0.08 ≈ AED 20,350/m².

Thus, the current average price in the building (AED 22,815/m²) falls within this fair range (between AED 20,350 and 23,260/m²). This means that a purchase at current weighted-average prices provides the target return for an investor (7–8% before costs, 6.6–6.7% after accounting for all entry expenses).

For Business Bay overall, to reach a 7–8% yield, prices would need to fall to the range of AED 16,600–19,000/m² (1,330 / 0.08 and 1,330 / 0.07), which is significantly below the average market levels of recent months (AED 25,700/m²). Therefore, the actual return for investors in the district is noticeably lower than in the TOP projects and top-tier buildings, which include THE PAD.

7. Outlook and comments

THE PAD shows stable demand in both sales and rentals and offers a yield above the average for the prestigious Business Bay district. The pace of rental growth and sales liquidity allow the asset to be viewed as a balanced investment, especially for long-term income. The yield level in the building is significantly higher than in Business Bay as a whole, which makes a purchase attractive in terms of long-term holding or resale amid further rental market growth. Price volatility in the building is slightly higher than the market, but the average indicators and liquidity remain competitive.