ROI analysis of apartment in DESERT SUN TOWER: DLD data and real deals

1. Definition of the area and data structure

Actual location: DESERT SUN TOWER is located in Wadi Al Safa 5, within the large residential community Dubai Land Residence Complex. This information is confirmed by open DLD transaction records.

According to the DLD database for this property:
– 103 sale transactions (for all apartments), of which 41 studio (“0BR”/“studio”) transactions have been recorded over the past 5 years.
– For rentals (via the equivalent of project_name_en), 401 studio lease contracts have been recorded in this complex – a sufficient volume for statistical analysis.

2. Liquidity and demand volume

Sales: Even for studios in DESERT SUN TOWER there is a steady flow of transactions: the most active periods are 2025 and 2026, but the DLD data also includes recent deals (2023–2024). This indicates stable interest from both investors and end-users.

Rentals: The number of new studio lease contracts has been consistently in the range of 10–20 agreements per quarter, including the last 12 months. This allows us to conclude that rental liquidity for this building is high within its segment.

3. Sale price dynamics and comparison with the area

Over the past 5 years, price dynamics for studios in DESERT SUN TOWER have been as follows:
– In 2020–2022: the average price per m² for studios fluctuated in the range of 5,200–6,200 AED.
– In 2023 and onwards: a significant increase — from late 2023 the average exceeds 8,000 AED per m² (latest known values: 7,800–8,300 AED/m²).
– Average price per m² for studio transactions over the last 12 months: 8,159 AED/m².

For comparison, the average level in Wadi Al Safa 5 (residential apartments)*:
– In 2020: values of 7,000–9,000 AED/m² were more common, but the range was wider.
– 2023–2024: a notable increase to 10,500–12,200 AED/m².
– Average price per m² in the area over the last 12 months: 14,304 AED/m² (i.e. the level for studios in DESERT SUN TOWER is significantly below the area average, with a gap of around -40%).

*Note: the area average includes a broader range of properties and formats; several boutique projects significantly push the average upwards.

4. Rental dynamics and levels

Rental rates for studios in DESERT SUN TOWER:
– 2020: 490–540 AED/m²/year,
– 2022: 470–570 AED/m²/year,
– 2023: 550–680 AED/m²/year,
– 2024: growth continues — up to 750–810 AED/m²/year.

Average rental rate for studios in this building over the last 12 months: 813 AED/m²/year.

For Wadi Al Safa 5 (all apartments):
– 2020: values of 420–495 AED/m²/year,
– 2023–2024: 650–770 AED/m²/year,
– Area average over the last 12 months: 773 AED/m²/year.

Thus, rental levels for the building and the area are comparable, with the building currently slightly ahead of the area (difference of about +5%). From this we can infer that average studios in DESERT SUN TOWER rent out somewhat better than in the area overall, which indirectly indicates tenant interest in this format.

5. ROI and fair investment price

Based on data for the last 12 months:

– Market purchase price for a studio: around 8,159 AED/m² (according to DLD transactions).
– Average annual rent level: 813 AED/m² (building), 773 AED/m² (area).

Return calculation (ROI):
– Gross ROI for a studio in the building: 813 / 8,159 = 9.97%.
– Gross ROI for the area: 773 / 14,304 = 5.4%.

After accounting for all initial costs (approximately 7–8% “entry” costs):
– Net ROI for the building: ~9.97% / 1.07 = 9.3% per annum (assuming stable occupancy).

“Fair price” range for an investor targeting 7–8% annual yield:
– For the building: 813 / 0.08 = 10,162 AED/m² (upper threshold); 813 / 0.07 = 11,614 AED/m² (even higher).
– The current price (8,159 AED/m²) is noticeably below this “investment range”; at the current price level, the potential yield even exceeds the 8% target.

6. Conclusions and outlook

– DESERT SUN TOWER demonstrates good market liquidity for studios and stable demand both for purchase and for rent.
– Market prices for studios are significantly below the area average, while rental levels are close to the area average, which explains the high investment yield (per DLD: gross up to 10% per annum, net around 9%).
– There has been steady growth in both sale and rental prices over the past 2 years. The probability of maintaining high yields in the coming years remains, but the potential for further price appreciation may be limited unless buyer demand in the area increases.
– For an investor, an indicative fair purchase price for studios is up to 10,000–11,600 AED/m² (for a target yield of 7–8%). The actual price is slightly below this range; an additional discount is already priced in by the market.

Recommendation: the property is highly attractive for a long-term investor focused on renting out studios. However, if rental demand weakens or competition in the area increases sharply, profitability may decline slightly.