1. Definition of the area and data structure
Actual location: According to DLD, the building Palace Residences – North belongs to the Al Khairan First area and is located within the Dubai Creek Harbour master project. The requested segmentation is for 1-bedroom apartments.
Deal structure: DLD records around 169 transactions for 1-bedroom apartments in this building from March 2023 to January 2026 (predominantly off-plan). Only the period up to the current date is analyzed.
Rental data for the building itself and even for the master project is not available yet, although the Al Khairan First area has a very large database of lease contracts (over 18,000), which allows us to build regional benchmarks.
2. Dynamics of deals, prices and volumes
Transaction activity: The bulk of transactions in Palace Residences – North falls in Q1 2023 — 102 deals for 1-bedroom apartments. Afterwards, there is a decline in each quarter: 10–15 deals in the subsequent quarters of 2023 and only a few transactions in 2024 (the overall downward trend persists).
Average price per m² dynamics (1-beds in the building):
– Q1 2023: about 22,266 AED/m²
– Q2 2023: 22,418 AED/m²
– Q3 2023: 22,586 AED/m²
– Q1 2024: 22,122 AED/m²
– Q2 2024: 25,278 AED/m²
– Q3 2024: 24,622 AED/m²
In the long term, there is a gradual increase in the average price: over the last year, transactions for 1-bedroom apartments in the building have been recorded at an average of 26,032 AED/m² (last 12 months).
Area benchmark (Al Khairan First, all apartments): The current average price per m² in the area (last 12 months) is 24,642 AED/m². This is roughly 5% lower than in the building. In 2023, the price level in the area was 21,000–22,000 AED/m², which indicates stable growth. The growth rate over 2 years is approximately 15–20%.
Looking at individual transactions in the building, there are some extremes (from 11,200 to 31,300 AED/m²), but the dense concentration of most deals is in the 25,000–30,000 AED/m² range, which confirms the average level.
3. Rent and yield
For the building itself and the master project, rental contracts have not yet been officially recorded in DLD (typical for new buildings and off-plan). In the Al Khairan First area, the rental market is actively represented.
Average rental rate per m² in the area over the last 12 months: 1,448 AED/m² per year.
Rental dynamics in the area: From 2022 to 2024, the average rate increased from 930 to about 1,400 AED/m², with growth of more than 50% over the last 2 years. Steady growth is confirmed in all quarters. In the most recent quarters (2024), the level is already 1,300–1,400 AED/m².
4. ROI and fair price range
ROI can only be calculated based on the area benchmark (there are still no real contracts for the building itself).
Gross annual yield (ROI_brutto) for Al Khairan First:
– price_psm (purchase, 12 months): 24,642 AED/m²
– rent_psm (rent, 12 months): 1,448 AED/m²
– ROI_brutto: 1,448 / 24,642 ≈ 5.9% per annum
Taking into account transaction costs (around 8% of the purchase price, all entry costs):
– ROI_net ≈ 5.5% per annum
With a target yield of 7–8% for an investor, the “fair” price range per m² based on the current area rental rate is:
– at 8%: 1,448 / 0.08 = 18,100 AED/m²
– at 7%: 1,448 / 0.07 = 20,700 AED/m²
This is roughly 15–25% below the current market level both for the building and for the area. Therefore, for the asset to be attractive to an investor targeting 7–8% annual yield, a substantial discount to current prices is required.
5. “Building vs area” comparison and liquidity
– Palace Residences – North (1-beds) is selling at a premium versus the area average (~5%).
– Al Khairan First demonstrates high liquidity (sales and rental volumes), indicating solid demand and investment appeal. For the building itself, demand is present but drops sharply after 2023 (typical for off-plan projects after the initial sales phase).
6. Outlook
– Price growth over the last 2 years has been very strong both for the area and for the building.
– Rental rates are growing faster than inflation and the wider market.
– Area liquidity is high, and for the building, increased interest is expected after it enters the secondary market and direct rental contracts in the asset start to appear.
Summary: At the current stage, purchases of 1-bedroom apartments in Palace Residences – North look justified from the standpoint of long-term capital appreciation. However, for the purpose of achieving an investment yield of 7–8% per annum based on the regional benchmark, current prices are 15–25% above the “fair” range. It is not yet possible to confirm actual market yield due to the absence of rental contracts for the building itself. Comparison with the wider area suggests that the asset may retain a price premium thanks to its newness and brand, but the yield is significantly below what many investors would ideally target.
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