The Residential Investor Jigsaw Part Three: Total Returns

The Residential Investor Jigsaw Part Three: Total Returns

Julian Roche Chief Economist

The logic of total returns What investors ought to consider is how much money they will make from an investment.

It is a straightforward assertion, but it is very surprising how long it has taken for the real estate market globally to take on board the concept of Total Shareholder Return (TSR). By contrast, international equity investors are increasingly recognising that this is not only about how to assess future prospects1 and become the capstone metric for directing corporate performance—as the Boston Consulting Group promotes with its Value Lens approach2—but equally, it is the best way to determine the success of investments to date3.

TSR is highly valued as a performance metric because of the relative simplicity of the methodology that it applies to evaluate the overall financial benefits availed by the stockholders over a specific time period. This, in turn, offers a clear perspective of the financial performance of the company over the same period4.

Some important caveats There are also some important choices for the investor which can significantly affect total return.

1. When is the investment’s start date? This is clearly significant: equity indexes often commence immediately after a severe market downturn in order to maximise the apparent total and average return to date.

2. The issue of interim investments. TSR is calculated only on the basis of positive (or at least net positive) cashflows over the investment period. Internal Rate of Return (IRR) is suited to the opposite, a series of negative cashflows and then a positive return5.

3. Leverage is ignored. The TSR of shares does not take into account the level of leverage decided upon by investors. Implicitly the assumption made is that investors are either unable or unwilling to undertake any leverage at all.

4. So is risk. As they are both forward-looking measures, neither TSR nor IRR reflect risks to cashflows, such as corporate leverage, which results in many equities certainly being volatile.

Evidently, volatility affects a snapshot analysis of how well a company is performing.

5. There are problems of agglomeration. TSR only captures performance at the share level. With alphabet stock6 a rarity due to management accounting and governance concerns, TSR is not much use to guide managers within companies.

6. Complexities of corporate structure must be included. Adding dividends to capital gains is not always the end of the story for firms – in complex TSR calculations, such as those of the Boston Consulting Group, it is necessary to include the value derived from spin-offs, any shares liquidated for cash, and any other payments received as a result of owning the shares such as warrants or share options.

7. As with all return calculations, size is left out of the picture. Investors, especially funds, care about being able to make large investments, whereas TSR can only measure a rate of return and is oblivious to size.

1

One example amongst many: DBS Bank reported that Societé Generale generally applies ‘Buy’ tags to stocks where it forecasts TSR of 15%

or more in the year ahead. See https://www.dbs.com.sg/private-banking/aics/pdfController.page?pdfpath=/content/article/pdf/CIO/ CIOInsights1Q20_ai.pdf Retrieved 19 March 2020 2

Boston Consulting Group (2020) The Value Lens. Available at: https://www.bcg.com/capabilities/corporate-development-finance/value-lens.

aspx Retrieved 20 March 2020.

3 Hansell, G., Kotzen, J., Roos, A., Wick, E., Olsen, E., Farag, H. and Link, M. (2020) The 2019 Value Creators Rankings. 19 June 2020. Boston Consulting

Group. Available at: https://www.bcg.com/en-au/publications/2019/interactive-value-creators-rankings.aspx Retrieved 20 March 2020.

4

Simply Wall Street (2020) If You Had Bought Emirates Insurance Company P.S.C (ADX:EIC) Shares Three Years Ago You’d Have Made 56%. 4 January

2020. Available at: https://simplywall.st/stocks/ae/insurance/adx-eic/emirates-insurance-company-psc-shares/news/if-you-had-boughtemirates-insurance-company-p-s-c-adxeic-shares-three-years-ago-youd-have-made-56/ Retrieved 20 March 2020.

5 TSR

can therefore be considered an internal rate of return (IRR) of positive cash flows for the duration of the investment.

6 Shares

2

issued to reflect the performance of only part of a company

The Residential Investor Jigsaw Part Three: Total Returns

Application to real estate According to Dun & Bradstreet in Australia7, the mandate of a CFO is to be the champion of TSR. If every real estate investor were to follow the same lens, what would be the result?

Applying TSR to real estate is both logical and practical, provided that both investors and analysts recognise that some of the same calculation issues apply to real estate as to shares. Total returns for commercial real estate are usually calculated as a function of Net Operating Income (NOI8) for each year in the holding period, plus the capital value (either through sale or valuation) at the end of the holding period9. The same problem of time period applies to real estate as to stocks. With the exception of some retail investments, the problem of negative cashflows does not apply to individual real estate investments.

Leverage is generally ignored in total return calculations, which are made at the property level, not that of a special purpose vehicle (SPV) or the investor. The issue of risk remains, but investment real estate tries to capture it at the individual property level through vacancy and collection losses. As a general rule too, the income component of an investment property return is relatively stable through time. By comparison, capital return is more volatile. This of itself does not, however, suggest that properties with a larger component of rent in their total return are less risky – far from it, as higher yields are themselves associated with higher volatility. Other income than rent from a property is unlikely, whilst any option value should be captured through capital gain. Agglomeration is irrelevant at the individual property level, although the difference in size between individual properties is evidently important for investors: for example, major funds will not invest directly in a multitude of small residential units. Overall, total returns as a measure of real estate performance work well.

Evidence from Dubai The two previous white papers in this series tackled yields and capital values for villas and apartments in the same districts of Dubai. The task now, made straightforward by the homogeneity of the Property Monitor database10 is to put the two sets of data together to calculate total returns. The original two data series were presented for four years, which means that total returns can be presented for one, two and three years. Unlike an equity (or even an off-plan purchase), its main use is in providing a benchmark for comparison.

The data below show, for apartments and villas, what happens when the two sets of data are combined according to the methodology described above. By way of explanation, the first set of columns shows what has happened to each location in terms of the absolute value of capital appreciation per sq m. Some of these figures show very considerable changes, many of them adverse. The next set of columns shows rents, again in absolute terms. As capital values decline, so do rents, or else yields would move substantially out of kilter. The third set of columns shows the total return in each year by adding cumulative rents to the value for that year. So, the first column simply adds the figures in the previous set of columns for September 2017 together. For Motor City, for example, that is 17 + 78 = 95. The second column does the same calculation for the following year, adding rents for the previous year. Again, for Motor City, that is -82 + 78 +64 = 60. In the final year, there are two years of rents to add – for Motor City, -167 + 78 + 64 + 58 = 33. The final set of columns is where the really interesting data lie: the total return for each year is indicated based on a purchase in September 2016, showing the answer to the question with which I had begun: how much money did the investor actually make?

7

Veldran, R. (2020) The CFO’s Mandate. Boston Consulting Group. Available at: https://www.bcg.com/en-au/capabilities/corporate-development-

finance/cfo-mandate.aspx Retrieved 20 March 2020.

8 NOI

= Gross Rental Income – Vacancy Losses – Operating Expenses

9 Realized

Capital Return = (Resale price – Sales Cost) / Purchase Price

10 The problems in fusing different measurements and indices together to achieve the same result is well documented in Shi, S. (2005) Total Returns

Analysis for the Wellington and Auckland Apartment Markets. Massey University. Available at: http://www.prres.net/papers/Shi_Total_Returns_ Analysis_Auckland_Wellington_Apartment.pdf Retrieved 20 March 2020.

3

The Residential Investor Jigsaw Part Three: Total Returns

The dispersion in total returns for apartments is striking. Whilst an investor in City Walk selling up in September 2019 would walk away with a total return over three years of no less than 29.2%, a similar investor in Dubai Residences would have a negative return of -21.1% even when rents are added to compensate for the decline in capital values. The evidence shows conclusively that overall indices conceal a lot that only granular data provided by an index like Property Monitor can reveal: the choice of location is decisive in determining total return so far as Dubai apartments are concerned.

As for villas, the same data are presented, and here there is no fortunate location that escapes a downturn in capital values. Rents are in the second set of columns and the same analysis is performed thereafter. The final results again show a very wide dispersion of results. Investing in Reem would have secured an 8.2% total return over three years but money placed in Dubai Investment Park would have seen a far lower total return of only -25.4%.

The evidence presented above is in gross form. Two deductions would be required to render them compatible with equity TSR. The first is that the rental yields exclude management costs and service charges. It’s unlikely that they will make a big comparative difference between localities as management charges are generally a percentage of rents throughout Dubai, as elsewhere, and service charges are broadly aligned with values. Together, the result of excluding these costs means that the relative importance of rents vs capital values will be slightly exaggerated.

The second is that the results also exclude selling costs and liquidity issues. Equity salespeople need not therefore entirely despair. These two deductions to net returns notwithstanding, the evidence is clear that local expertise would have generated impressive results in an otherwise generally flat market.

Table One: Capital Values, Rents and One-, Two- and Three-Year Total Returns from 2016 for Dubai Apartments Capital Value Appreciation

Motor City

Cumulative TR: Capital Values + Rents

Rents

Sep-17

Sep-18

Sep-19

Sep-17

17

-82

-167

78

Sep-18 Sep-19

Sep-17

64

58

95 127

14

35

16

Cumulative TR

Sep-18 Sep-19

Sep-17

Sep-18

Sep-19

33

10.6%

6.7%

3.7%

-39

9.2%

1.0%

-2.8%

-145

3.8%

1.8%

-16.0%

60

10

-196

-334

117

93

85

IMPZ

-38

-121

-330

73

64

47

Zabeel

-14

-49

-321

123

114

98

109

187

13

7.3%

12.6%

0.9%

City Walk

251

118

23

139

153

144

390

410

459

24.8%

26.1%

29.2%

Jumeirah Lakes Towers

-14

-162

-300

107

87

76

93

33

-29

7.9%

2.8%

-2.4%

42

43

-11

84

81

78

126

208

232

13.8%

22.8%

25.4%

-146

-160

-242

80

76

72

-66

-3

-13

-6.1%

-0.3%

-1.2%

Dubai Sports City

-26

-102

-215

79

71

62

53

49

-2

5.8%

5.3%

-0.2%

Discovery Gardens

24

-135

-222

81

63

54

104

8

-24

12.5%

1.0%

-2.9%

-60

-168

-230

21

18

17

-39

-129

-174

-4.9%

-16.4%

-22.1%

64

-29

-209

83

74

66

147

128

14

10.4%

8.7%

1.0%

DIFC

-60

-128

-368

97

91

82

37

60

-98

2.0%

3.3%

-5.6%

International City

-22

-131

-217

39

31

27

17

-62

-121

2.4%

-9.1%

-21.1%

73

-20

-181

91

84

74

164

154

67

11.2%

10.0%

4.7%

Emirates Living

Al Furjan Jumeirah Village Triangle

Dubai Residence Complex (Sky Court Towers) Dubai Marina

Palm Jumeirah Downtown Burj Khalifa

24

-79

-267

112

103

94

136

136

41

7.2%

7.1%

2.3%

Remraam

-4

-75

-171

51

45

41

47

21

-34

5.4%

2.5%

-4.3%

Culture Village

-30

-206

-403

99

81

73

69

-26

-150

4.3%

-1.6%

-10.6%

Jumeirah Beach Residence

-14

-16

-297

86

85

68

72

155

-58

5.2%

11.4%

-4.3%

85

75

164

161

85

12.2%

11.4%

6.4%

Business Bay

4

70

-18

The Residential Investor Jigsaw Part Three: Total Returns

-170

94

Table Two: Capital Values, Rents and One-, Two- and Three-Year Total Returns from 2016 for Dubai Villas Capital Value Appreciation

Al Furjan Villas

Cumulative TR: Capital Values + Rents

Rents

Sep-17

Sep-18

Sep-19

Sep-17

-31

-71

-271

45

Sep-18 Sep-19

Sep-17

Sep-18

42

32

14

17

-151

57

49

46

-32

-127

57

48

43

-36

32

31

4

Arabian Ranches

-89

-233

-301

Arabian Ranches 2

-93

-237

-305 -163

37

Sep-19

Cumulative TR Sep-17

Sep-18

1.5%

1.7%

Sep-19 -15.9%

-149

-2.8%

-11.1%

-13.0%

-132

-157

-3.2%

-11.5%

-13.7%

-20

-63

0.5%

-2.4%

-7.5%

Dubai Silicon Oasis

-33

-89

Falcon City of Wonders

-25

-68

-191

38

35

30

13

5

-88

1.6%

0.6%

-10.3%

-12

-49

-147

53

49

43

41

53

-3

4.1%

5.3%

-0.3%

81

-84

-131

49

41

41

130

6

0

11.6%

0.6%

0.0%

44

41

40

8

-53

-123

0.7%

-4.2%

-9.7%

54

47

45

2

-57

-76

0.2%

-5.2%

-6.9%

36

-115

-169

-249

-10.8%

-15.8%

-23.4%

-357

-126

49

-24.7%

-8.7%

3.4%

11

-7.3%

1.1%

1.2%

Motor City Jumeirah Golf Estates Villas Jumeirah Islands

-36

-139

-249

Jumeirah Park

-52

-158

-222

46

40

53

56

62 40

-66

10

Jumeirah Village Triangle

-161

-255

-371

Mohammed Bin Rashid City (Polo Townhouses)

-410

-235

-121

-111

-78

-117

45

43

35

-8

-94

59

53

47

94

104

65

11.9%

13.2%

8.2%

38

33

30

25

-54

-144

3.0%

-6.6%

-17.6%

40

33

33

-38

-164

-210

-4.5%

-19.8%

-25.4%

48

-56

-142

-233

-4.8%

-12.1%

-19.9%

54

0

-125

-154

0.0%

-11.0%

-13.5%

Mudon Reem The Villa

-13

-87

-174

Dubai Investment Park

-78

-197

-243

58

51

58

51

Dubai Sports City

-114

-193

-281

Emirates Living

-58

177

-208

Levered total returns There is a third modification that could be made. As total returns are calculated at the property level, no leverage has been introduced into the analysis above. If a direct comparison were to be made with investment in a corporate, for instance, the property would be unfairly treated.

Establishing fair comparability, however, turns out not to be straightforward. Two leverage variables should be considered. First, interest rates for mortgages in Dubai are frequently offered with lower rates for the first three years. Should the three-year investment return be modified on the assumption that it is an initial investment, taking advantage of the lower rates? Or as a continuing investment, and not doing so? Second, loan-tovalue (LTV) ratios vary between borrowers as well as between properties. How should they be incorporated?

The answer lies in the fact that the investment is deemed to commence at a real point in time, in this case September 2016. Actual market interest rates for the three years after then, including a reasonable first three-year mortgage offer, should be included. Many mortgages are fixed rate and a reasonable assumption might be around 6%. At the individual level, assessing the merits of investment, Cavendish Maxwell investment models would usually employ actual offers from banks, which may vary between different properties—although probably not much. However, for the purpose of overall comparison, actual average market LTV ratios have been used. Information on average (as opposed to maximum) LTVs in Dubai is not publicly available, but given that in 2013 the UAE Central Bank imposed a LTV limit of 75%—increased to 80% for 2020 for first-time buyers—and many mortgages will have been significantly repaid since then, an approximation of 50% might be a good starting point. Finally, what type of mortgage? A simple amortising structure for a Western-style mortgage over 20 years is a good starting point for a comparison with the original unlevered investment returns. The results are again reproduced below, both for apartments and villas.

5

The Residential Investor Jigsaw Part Three: Total Returns

Table Three: Capital Appreciation, Net Rents and One-, Two- and Three-Year Levered Total Returns for Apartments Capital Value Appreciation Sep-17

Sep-18

Cumulative TR: Capital Values + Rents

Net Rents Sep-19

Sep-17

Sep-18

Sep-19

Sep-17

Sep-18

Sep-19

Cumulative TR of Equity Sep-17

Sep-18

Sep-19

Motor City

17

-82

-167

40

26

20

95

-17

-82

21.3%

-3.7%

-18.3%

Emirates Living

10

-196

-334

58

34

25

127

-104

-217

18.4%

15.1%

-31.4%

IMPZ

-38

-121

-330

34

25

8

35

-62

-263

7.7%

13.6%

-57.7%

Zabeel

-14

-49

-321

59

50

34

109

-59

-179

14.6%

8.0%

-24.0%

City Walk

251

118

23

71

86

76

390

275

256

49.6%

35.0%

32.6%

Jumeirah Lakes Towers

-14

-162

-300

56

36

25

93

-69

-182

15.8%

-11.7%

-30.7%

42

43

-11

45

42

39

126

129

114

27.6%

28.4%

25.1%

-146

-160

-242

34

30

26

-66

-95

-151

-12.3%

-17.8%

-28.2%

Dubai Sports City

-26

-102

-215

40

32

23

53

-31

-121

11.6%

-6.6%

-26.2%

Discovery Gardens

24

-135

-222

45

27

19

104

-63

-131

25.1%

-15.2%

-31.6%

-60

-168

-230

-12

-16

-17

-39

-196

-275

-9.8%

-50.0%

70.0%

64

-29

-209

22

14

5

147

7

-168

20.8%

1.0%

-23.9%

DIFC

-60

-128

-368

17

10

2

37

-101

-339

4.0%

-10.8%

-36.2%

International City

-22

-131

-217

8

1

-3

17

-122

-211

4.7%

-34.8%

-60.2%

Palm Jumeirah

73

-20

-181

28

21

11

164

28

-122

22.3%

3.9%

-16.6%

Downtown Burj Khalifa

24

-79

-267

30

22

13

136

-26

-202

14.4%

-2.8%

-21.4%

Al Furjan Jumeirah Village Triangle

Dubai Residence Complex (Sky Court Towers) Dubai Marina

-4

-75

-171

14

8

3

47

-53

-146

10.8%

-12.3%

-33.7%

Culture Village

-30

-206

-403

30

11

3

69

-165

-359

8.5%

-20.4%

-44.3%

Jumeirah Beach Residence

-14

-16

-297

26

26

9

72

37

-235

10.4%

5.4%

-34.2%

Business Bay

70

-18

-170

36

27

18

164

45

-89

24.4%

6.8%

13.2%

Remraam

Table Four: Capital Appreciation, Net Rents and One-, Two- and Three-Year Levered Total Returns for Villas Capital Value Appreciation Sep-17

Sep-18

Cumulative TR: Capital Values + Rents

Net Rents Sep-19

Sep-17

Sep-18

Sep-19

Sep-17

Sep-18

Sep-19

Cumulative TR of Equity Sep-17

Sep-18

Sep-19

Al Furjan Villas

-31

-71

-271

5

1

-8

-26

-78

-274

-5.5%

-16.5%

-57.6%

Arabian Ranches

-89

-233

-301

8

0

-3

-81

-237

-297

-14.2%

-41.3%

-51.8%

Arabian Ranches 2

-93

-237

-305

7

-1

-7

-86

-245

-306

-14.9%

-42.5%

-53.1%

Dubai Silicon Oasis

-33

-89

-163

1

-4

-5

-32

-98

-171

-7.7%

-23.3%

-40.7%

Falcon City of Wonders

-25

-68

-191

2

-2

-6

-23

-76

-197

-5.5%

-17.9%

-46.4%

Motor City

-12

-49

-147

10

6

0

-2

-43

-131

-0.5%

-8.6%

-26.3%

Jumeirah Golf Estates Villas Jumeirah Islands

81

-84

-131

1

-8

-8

82

-99

-145

-14.5%

-17.6%

-25.7%

-36

-139

-249

-10

-13

-14

-46

-166

-286

-7.3%

-26.3%

-45.3%

-52

-158

-222

7

0

-2

-45

-159

-216

-8.3%

-29.2%

-39.7%

Jumeirah Village Triangle

-161

-255

-371

1

-6

-10

-160

-271

-386

-30.1%

-50.8%

-72.5%

Mohammed Bin Rashid City (Polo Townhouses)

-410

-235

-121

-10

-6

-1

-420

-242

-137

-58.0%

-33.4%

-19.0%

-111

-78

-177

6

4

1

-105

-73

-106

-23.1%

-16.1%

-23.4%

Jumeirah Park

Mudon Reem

35

-8

-94

25

19

13

-60

24

-37

15.1%

6.1%

-9.4%

The Villa

-13

-87

-174

2

-3

-6

-11

-95

-180

-2.6%

-23.2%

-43.8%

Dubai Investment Park

-78

-197

-243

5

-3

-3

-73

-202

-244

-17%.7

-48.9%

-58.8%

Dubai Sports City

-114

-193

-281

7

1

-3

-107

-195

-276

-18.2%

-33.2%

-47.0%

Emirates Living

-58

-177

-208

9

1

4

-49

-171

-194

-8.6%

-29.9%

-33.7%

6

The Residential Investor Jigsaw Part Three: Total Returns

These results are salutary. Leverage extends both positive and negative results. Even excluding any time value of money considerations as total returns do, the evidence demonstrates that at a time of flat returns, leverage can often produce negative results for poorly chosen property investments. In some cases, yields could not even match mortgage payments at a 50% LTV. On the other hand, successful localities such as City Walk exhibit far better results after leverage. A well-chosen investment in the Dubai property market could have achieved a total return in excess of 100% over three years, effectively doubling investors’ money.

One final point, which is about diversification. This is one of the advantages of leverage which is never, by definition, reproduced in the direct comparison between unlevered and levered returns at the individual property level. In the examples of investment above, the equity required for purchase of the property is always half in the levered calculations of what it was for the unlevered. What should be assumed about investors’ use of the remaining half of their funds? Over the past three years, a sensible financial adviser would probably have recommended that the other half of funds ought to have been retained in cash. The effect of retaining 50% of investment in cash whilst levering investment in real estate would significantly lower investor losses.

The results with a 50% cash allocation, assuming there is no income from the cash, are naturally half the levered results, and may be considered the end result of the analysis. For apartments, the very mixed results with a few stars are as follows:

Table Five: Levered Total Return for Dubai Apartments with a 50% cash allocation

Motor City

Sep-17

Sep-18

Sep-19

10.6%

-1.9%

-9.2%

Emirates Living

9.2%

-7.6%

-15.7%

IMPZ

3.8%

-6.8%

-28.9%

Zabeel City Walk Jumeirah Lakes Towers

7.3%

4.0%

-12.0%

24.8%

17.5%

16.3%

7.9%

-5.8%

-15.3%

Al Furjan

13.8%

14.2%

12.5%

Jumeirah Village Triangle

-6.1%

-8.9%

-14.1%

Dubai Sports City

5.8%

-3.3%

-13.1%

Discovery Gardens

12.5%

-7.6%

-15.8%

Dubai Residence Complex (Sky Court Towers)

-4.9%

-25.0%

-35.0%

Dubai Marina

10.4%

0.5%

-11.9%

2.0%

-5.4%

-18.1%

International City

2.4%

-17.4%

-30.1%

Palm Jumeirah

11.2%

1.9%

-8.3%

DIFC

Downtown Burj Khalifa

7.2%

-1.4%

-10.7%

Remraam

5.4%

-6.1%

-16.8%

Culture Village

4.3%

-10.2%

-22.1%

Jumeirah Beach Residence

5.2%

2.7%

-17.1%

12.2%

3.4%

-6.6%

Business Bay

7

The Residential Investor Jigsaw Part Three: Total Returns

And finally, the less attractive outcome for villas is displayed as follows:

Table Six: Levered Total Return for Dubai Villas with a 50% cash allocation Sep-17

Sep-18

Sep-19

Al Furjan Villas

-2.8%

-8.2%

-28.8%

Arabian Ranches

-7.1%

-20.6%

-25.9%

Arabian Ranches 2

-7.5%

-21.3%

-26.6%

Dubai Silicon Oasis

-3.8%

-11.6%

-20.4%

-2.7%

-8.9%

-23.2%

-0..2%

-4.3%

-13.1%

Falcon City of Wonders Motor City Jumeirah Golf Estates Villas Jumeirah Islands

7.3%

-8.8%

-12.9%

-3.6%

-13.1%

-22.6%

-4.1%

-14.6%

-19.8%

-15.1%

-25.4%

-36.3%

Mohammed Bin Rashid City (Polo Townhouses)

-29.0%

-16.7%

-9.5%

Mudon

-11.6%

-8.1%

-11.7%

Jumeirah Park Jumeirah Village Triangle

Reem

7.6%

3.1%

-4.7%

The Villa

-1.3%

-11.6%

-21.9%

Dubai Investment Park

-8.8%

-24.4%

-29.4%

Dubai Sports City

-9.1%

-16.6%

23.5%

Emirates Living

-4.3%

-14.9%

-16.9%

Conclusion This analysis has used only a representative sample of the locations and price observations held within the Property Monitor database to calculate total returns in Dubai residential property investment over a three-year investment horizon. They are presented here more in the spirit of demonstration of how a modelling exercise of total returns would look. So certainly, any averaging of the total returns in this analysis should not be used as a reflection of the Dubai market, as a whole.

Nevertheless, even from these few districts and over only three years, the analysis above has shown how even at a time of flat or even falling market prices generally, it is possible to make highly successful investments in the Dubai secondary real estate market, especially if investment is selectively targeted on particular locations. No doubt it is necessary to have firstclass advice before investing, but with real estate, it is ever thus – the data presented above are only there to provide proof of what experienced real estate investors have always known about the vital importance of local knowledge.

The next step is to make a comparison between total returns in the secondary real estate market and two of the most obvious and potentially attractive alternatives, the Dubai equities market and off-plan residential development. That will be the task of the final white paper in this series.

8

The Residential Investor Jigsaw Part Three: Total Returns

Dubai 2205 Marina Plaza, Dubai Marina, P.O. Box 118624, Dubai, United Arab Emirates T: +971 4 453 9525 E: info@cavendishmaxwell.com

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Muscat Villa 836, Way 3012, Al Sarooj, P.O. Box 3438, Muscat Sultanate of Oman T: +968 99 44 5917 E: info@cavendishmaxwell.com

Disclaimer: The information and analysis contained in this report is based on information from a variety of sources generally regarded to be reliable, and assumptions which are considered reasonable, and which was current at the time of undertaking market research, but no representation is made as to their accuracy or completeness. We reserve the right to vary our methodology and to edit or discontinue the indices at any time, for regulatory or other reasons.

The report and analysis do not purport to represent a formal valuation of any property interest and must not be construed as such. Such analyses, including forward-looking statements are opinions and estimates only, and are based on a wide range of variables which may not be capable of being determined with accuracy. Variation in any one of these indicators can have a material impact on the analysis and we draw your attention to this.

Cavendish Maxwell and Property Monitor do not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this report.

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