The words “guaranteed return” in a Dubai developer brochure should trigger a background check, not a purchase decision.
A guaranteed rental return is a developer promise to pay the buyer a fixed percentage of purchase price (commonly 6-10% annually) for a defined period post-handover, usually two to five years, whether or not the unit is actually tenanted. The mechanism is simple: the developer either retains the unit for short-let operation and pays you a contractual yield, or pays out of their own cash flow. RERA does not guarantee the guarantee. If the developer fails, the promised payments fail with them.
In 2019-2020 several mid-tier Dubai developers offered GRRs of 8-10%. By 2022 a few had quietly stopped paying, citing pandemic exceptional circumstances. Some buyers recovered. Others spent years litigating. The better-funded developers honoured every instalment.
The rule for a GRR offer: check if the yield is realistic against the area’s actual rental market before deciding it is value. An AED 1.2M JVC studio paying a contractual 9% means AED 108,000/year in rent. The actual market rent for that studio might be AED 70,000. The developer is paying you with their margin, not the market. Eventually that stops.
Related: Buyback, Developer Incentive, Rental Yield, Net Yield.
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