ROI analysis of apartment in The Residences: DLD data and real deals

1. Definition of the area and data structure

Actual location: according to DLD, the building The Residences belongs to the Al Thanyah Fifth area. The analysis is based strictly on this area definition; alternative or marketing names are not used.

Deal structure: over the past 5 years, there have been 25 transactions with 2-bedroom apartments in The Residences, which provides a representative base for analyzing price dynamics and liquidity for this asset.

For rental analysis of The Residences (and even for the master project or the area separately for 2-bedroom units), not a single valid rental contract has been found in the DLD over the past 5 years. Therefore, the rental benchmark has to be built on the entire residential stock of Al Thanyah Fifth, where the sample is very large (tens of thousands of contracts).

2. Price dynamics for the apartment and the area

The dynamics of the average price per square meter for 2-bedroom apartments in The Residences has shown steady growth since 2021:

– In 2021, the price per m² was 16,400 AED; after a correction at the beginning of 2022, a new growth phase followed, and from late 2022 to 2024 prices stabilized around 15,800–19,100 AED/m² with individual peak periods.
– In the last four quarters there have been isolated transactions above 19,000 AED/m², indicating strong demand for this product.

At the same time, in Al Thanyah Fifth the average price per m² over the past 12 months amounted to 19,500 AED. The average price level of recent transactions in The Residences is even slightly above the area benchmark, reflecting its appeal and status.

Quarterly dynamics for the area shows a similar trend: rapid growth from mid-2022 (from ~10,000–12,000 AED/m² to 17,000–20,000 AED/m² with a stable retention of high values). This points to high liquidity and investment attractiveness of the entire location.

Average price per m² in The Residences (all apartments, sales over the last 12 months): 20,775 AED.
Average price in the area (for the same period): 19,500 AED.

3. Rental dynamics and levels

For the individual building or even for the area in the 2-bedroom segment, there are no valid DLD contracts: only the total residential rental stock of the area is segmented.

The average rent across the entire residential stock of Al Thanyah Fifth over the past 12 months is 1,104 AED per year per m². This figure is confirmed by a large number of contracts and can therefore be used as an area benchmark for assessing yield and fair value of the asset.

Area trend:
– Rental rates increased from 600 AED/m² in 2021 to 1,100 AED/m² in 2024. In recent quarters, the growth rate has slowed, but rents have consolidated at new highs.

4. ROI and investment benchmarks

ROI_brutto for the area is estimated using valid DLD figures:

– Gross yield for the area: 1,104 / 19,500 ≈ 5.7% per annum
– Taking into account entry costs (around 7–8% of the transaction price), the actual net yield (ROI_net) for the area will be in the range of 5.3–5.4% per annum.

For The Residences, a separate ROI calculation is not possible (there is no rental data for the building, all benchmarks are only at area level).

“Fair” investment price range for a 7–8% annual yield (based on DLD rental data):
– Lower bound (8%): 1,104 / 0.08 ≈ 13,800 AED/m²
– Upper bound (7%): 1,104 / 0.07 ≈ 15,800 AED/m²

Therefore, the current average sales level (20,775 AED/m² for the building, 19,500 AED/m² for the area) is significantly above the range corresponding to a 7–8% yield, and aligns with an actual market yield of about 5.3–5.7%. To buy with a target yield of 7–8%, a 20–30% discount to current prices would be required.

This is not a formal valuation, but a guideline for an investor based on DLD market data for the past year.

5. Liquidity, conclusions and outlook

Liquidity: both for the area and the building, transaction and contract volumes are very high, dynamics are stable, and demand remains strong even during periods of market volatility. Al Thanyah Fifth (including The Residences) is among the most liquid locations with a transparent transaction history.

The dynamics of recent years show rapid growth in both sales and rents, followed by a transition to a plateau: the area has entered a phase of high price stability. Given current levels, the potential for further accelerated price growth is limited, but no significant decline is visible over the next 1–2 years.

For an investor focused on capital appreciation, the asset remains attractive; however, entry into the market is now occurring at the upper end of market levels. With a focus on yields of 6%+, particular attention should be paid to the entry price.

Risks: the main risk for an investor is failing to achieve a yield above 7% per annum without a substantial discount to the market. For landlords, liquidity is very high; for a speculator betting on price growth, there is a risk of price stagnation in the event of a sharp increase in new project supply, although this is not yet visible on the current horizon.