ROI analysis of apartment in J8: DLD data and real deals

1. Definition of the area and data structure

Actual location: According to DLD data, J8 belongs to the Al Safouh First district and the Sufouh Gardens master project. The database records 103 sale transactions in this building, and 286 lease contracts (for the entire building over recent years).

2. Liquidity assessment and transaction frequency

Over the past 4 years, transactions in J8 have been occurring regularly, with a high number of deals per quarter (from 4 to 10 transactions in almost every quarter of 2023–2024). This reflects good liquidity of the building both at the initial sale stage and in subsequent resales.

Rental activity in J8 is very high — more than 280 contracts, which is above the market average for buildings of a similar scale. The Al Safouh First district is also characterized by high rental activity. This is a positive signal for investors targeting stable demand.

3. Price per square meter: dynamics and level

Average price per m² in J8 (2020–2024):

– 2020: 7,900–10,200 AED/m²
– 2021–2022: from 7,900 to 11,600 AED/m² (with some quarters below 9,000)
– 2023: gradual growth from 9,800 to 10,900 AED/m²
– 2024: notable increase — quarterly averages at 12,500–13,900 AED/m²

In Al Safouh First prices are significantly more volatile: quarterly dispersion is wide — from 8,100 to over 25,000 AED/m² even in recent transactions. This reflects the presence of prime projects and substantial heterogeneity of the stock. However, over the last several quarters the district’s average price has exceeded 19,000 AED/m² (with peaks above 26,000–33,000 AED/m²).

Average market price per m² over the last 12 months:

– J8: 14,900 AED/m²
– Al Safouh First: about 19,100 AED/m²

J8 is noticeably cheaper than the district average, which is linked to the building’s position and concept (non-flagship projects in the area pull the median up).

4. Rental rate dynamics and level

Average annual rental rate over the last 12 months:

– J8: 1,130 AED/m²/year (a very high figure for the mass segment)
– Al Safouh First: 950 AED/m²/year

Rental rates in J8 have been steadily increasing: from 670–810 AED/m²/year in 2020–2022, to 790–950 AED/m²/year in 2023, and above 1,000 AED/m²/year in 2024.

In Al Safouh First the trend is also upward, but smoother: 580–680 AED/m²/year in 2020–2022, reaching 830–940 AED/m²/year by 2024.

5. Level comparison and yield (ROI) calculation

Based on the last 12 months:

– Current average transaction price in J8 — about 14,900 AED/m², rent — 1,130 AED/m²/year.
– In the district, the median price — 19,100 AED/m², rent — 950 AED/m²/year.

Gross yield (ROI_brutto):

– J8: 1,130 / 14,900 = 7.6% per annum (for an average owner)
– District: 950 / 19,100 = 5.0% per annum

Taking into account initial costs (7–8% of the purchase price), effective yield (ROI_net):

– J8: 7.0–7.1% per annum
– District: 4.6–4.7% per annum

6. Fair price range for an investor (self-assessment based on a 7–8% annual yield):

– For J8 at the current rental level: a “fair for investor” price is in the range of 14,125–16,150 AED/m² (which is close to current average deals in the building; no additional discount is required).
– For the district (at the current rent of 950 AED/m²): a fair level is 11,875–13,570 AED/m² — while the market is trading significantly higher (median 19,100 AED/m²), meaning most district transactions fall outside the 7–8% investment yield range even with full occupancy and no commission.

7. Key takeaways

– J8 is one of the most liquid and in-demand assets in the district in terms of the number of sales and lease contracts.
– Stable growth of both price per m² and rental rates in the building over a 3–5 year horizon, supported by solid demand.
– Current yield in J8 for an investor is higher than the district average; the asset is better suited for buy-to-let than the vast majority of alternatives in Al Safouh First.
– A contemporary investor can expect a net yield of around 7% per annum when buying at the market price of the last 12 months.
– Overall district yields are noticeably lower due to expensive projects aimed primarily at end users rather than rental.
– For investors, the optimal strategy in J8 is a purchase with a focus on rental income and moderate capital appreciation over the next 3–5 years. An optimal entry point would be at or below 16,000 AED/m².
– The building’s price growth potential is likely above the district average, driven by increasing market differentiation and a restrained pipeline of comparable new projects in Al Safouh First.