IRR is the metric that actually tells you whether a Dubai off-plan deal beat a bond. Very few agents can calculate it. Fewer still will admit why.
IRR is the annualised rate of return that accounts for the timing and size of every cash flow across the life of the investment — the down payment, each construction instalment, the handover balloon, the rental cash flows once leased, and the exit proceeds net of costs. A high headline ROI with money paid upfront is worse than the same ROI with money paid over three years. IRR knows that. Sticker ROI doesn’t.
For a typical Dubai off-plan 1BR bought on a 60/40 construction-linked plan at AED 1.2M, handed over after 30 months, rented for two years, then sold at AED 1.5M, the IRR — after all fees, realistic service charges, and two weeks vacancy per year — typically lands between 11% and 16% per annum. On a ready-unit cash purchase the same appreciation gives a much lower IRR because your money was locked up from day one.
A client last year was comparing two units: a ready Business Bay 1BR and an off-plan Dubai Creek Harbour unit with a 60/40 plan. Same expected exit. The IRR on the off-plan came out 480 bps higher. Same profit, different capital deployment.
Model the timeline, not just the totals.
Related: ROI, ROC, ROE, Payment Plan.
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