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1. Definition of the area and data structure
Actual location: According to DLD, Paramount Tower Hotel & Residences is located in Business Bay (area_name_en = ‘Business Bay’).
Data structure and volume:
– A total of 864 sale transactions have been recorded in the building, including 148 for studios.
– Over the past 12 months there have been 9 studio sale transactions and 3 active studio rental contracts.
The data volume for Business Bay is significantly larger (tens of thousands of sale transactions and several thousand studio rentals), which allows us to confidently use averaged analytics for benchmarking.
2. Transaction dynamics and liquidity
In Paramount Tower Hotel & Residences, transaction activity for studios has been clearly visible over the past 3–4 years: there were 64 deals in 2022, 21 in 2023, and 6 already in 2024 (year-to-date). The volume is small compared with the overall number of transactions in Business Bay, but sufficient to draw conclusions about the liquidity of this unit type within the building itself.
The rental market in this particular building is represented by a limited number of studio contracts (13 in total over the entire period, 3 in the last 12 months), whereas Business Bay as a whole has a very stable and extensive database (3,965 studio rental contracts over the last 12 months).
3. Dynamics of average sale price and rent per m²
Sales (studios):
– The average price per square metre for studios in Paramount Tower Hotel & Residences over the last 12 months was 21,307 AED/m² (9 transactions, unit sizes ranging from 20–100 m², with a reasonable exclusion of outliers).
– For comparison, the average price for studios in Business Bay over the same period is noticeably higher at 27,869 AED/m² (5,137 transactions: a large market sample).
Building-level dynamics:
– Quarterly from 2020 to 2024, the average price in the building fluctuated between 18,200 and 29,000 AED/m², more often in the 21,000–26,000 AED/m² range, with some volatility typical for a relatively small number of transactions per quarter.
Area-level dynamics:
– In Business Bay, the average studio price per m² has varied by year from 18,000 to 29,000 AED/m², but the trend over the last two years is clearly upward: from ~22,000 AED/m² at the end of 2022 to ~28,000 AED/m² by mid-2024.
Rent (studios):
– The average annual rental rate per m² for studios in the building over the last 12 months is 1,618 AED/m² (3 contracts). In Business Bay the figure is similar — 1,601 AED/m² (3,965 contracts, which provides a robust sample).
Rental dynamics:
– In Paramount Tower Hotel & Residences, average quarterly values for 2022–2025 ranged from 1,170 to 2,100 AED/m², with growth visible in H2 2023 and especially in 2024.
– In Business Bay, growth has been gradual: from ~870–1,000 AED/m² in 2020 to 1,500–1,600 AED/m² in 2024–2025.
4. Building vs area comparison and benchmarking
– In terms of average sale price per m² for studios over the last 12 months (21,307 AED), Paramount Tower Hotel & Residences is significantly below the Business Bay average (27,869 AED) — the building is “in the market” or even offers a slight discount relative to the area’s average rental yield.
– At the same time, annual studio rents in the building are on par with the area average (1,618 in the building versus 1,601 in the area).
5. Yield (ROI) and “fair price” calculation
Brutto ROI:
– For Paramount Tower Hotel & Residences, ROI_brutto = average rent per m² / average price per m² = 1,618 / 21,307 ≈ 7.6% per annum.
– For Business Bay, ROI_brutto = 1,601 / 27,869 ≈ 5.7% per annum.
Net ROI including initial costs (7%):
– For the building: ROI_net ≈ 7.6% / 1.07 ≈ 7.1% per annum.
– For Business Bay: ROI_net ≈ 5.3% per annum.
“Fair investor price” for a target yield of 7–8% per annum:
– For Paramount Tower Hotel & Residences, the fair price range per m² is 1,618 / 0.08 = 20,225 AED (8% yield) and 1,618 / 0.07 = 23,114 AED (7% yield).
– The actual average market price per m² (21,307 AED) lies squarely within this range, indicating that the “net” deal price is close to fair value for an investor targeting a 7–8% yield.
– For Business Bay, the average price level per m² (27,869 AED) is above the fair range for a desired 7–8% yield; to reach such returns, a discount of 13–18% would be required.
6. Outlook and conclusions for the investor
– Liquidity: Transaction and rental volumes in the building are limited but present; at the area level, liquidity is very high. Paramount Tower Hotel & Residences is a typical representative of the high-rise segment in Business Bay, where supply is very large and demand is stable.
– Dynamics: Since 2020, studio rents have been growing steadily and prices have been recovering; the trend in Business Bay over the last two years is one of pronounced growth.
– The current yield level in the building — 7.6% (up to 7.1% net, taking costs into account) — is at the upper end of the market range for Business Bay and fully aligns with the goals of a buy-to-let investor targeting a 7–8% return.
– The discount to the area’s average price (due to a slightly lower entry price at the same rental level) makes the asset moderately attractive for investment entry.
– Over a 3–5 year horizon, high rental demand is likely to persist, but due to the large volume of new supply, some price volatility is possible against a backdrop of stable demand.
7. Summary
Paramount Tower Hotel & Residences (studios) is a liquid asset within Business Bay, offering a favourable combination of average entry price and market rental yield, allowing investors to achieve a net ROI of around 7–7.1% per annum (based on verified DLD data). The current price range is consistent with fair value for the target investor yield. There is no overpayment versus the area, and no need for an additional discount.
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