Capital appreciation is paper money until you sell. Dubai taught a lot of 2014-buyers that lesson twice.
Capital appreciation is the unrealised increase in the market value of a property above the purchase price — the delta between what you paid and what today’s market says the asset is worth. It becomes realised only on exit, and the cost of exit (agent fee, NOC, DLD if the buyer doesn’t absorb it, any early mortgage settlement) comes straight out of that unrealised number.
The trap is the quarterly self-valuation. A Dubai Marina 1BR bought at AED 1.1M in 2021 and valued by the agent at AED 1.55M in 2024 looks like a 40% gain. But that valuation is an asking-price estimate from a broker who wants the listing, not a transaction price. On secondary-market transactions I see across roughly 1000+ broker relationships, closing prices run 3-7% below agent-suggested list in a normal market and 10-12% below in a soft one.
Valuation Certificates from DLD-approved valuers exist for a reason. If you’re borrowing against appreciation — refinancing, for example — the bank’s valuer will mark it closer to reality than the agent who wants your listing.
Realised beats unrealised. Every time.
Related: Appreciation, Equity, Exit Strategy, Valuation Certificate.
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