Why We Don't Quote "Rental Yields" on Off-Plan

Off-plan property is often marketed with attractive projected yields. On brochures, launch decks and broker messages, these numbers can appear precise: 7%, 8%, sometimes more.

But precision is not the same as evidence.

At EGRE, we do not quote "rental yields" on off-plan property as if they are current income. A property that has not yet been completed, leased, operated or tested in the rental market does not have a yield. It has a projection.

That distinction matters.

A yield is based on income that can be evidenced. An off-plan return is based on assumptions: future rent, future service charges, future supply, future tenant demand, future market conditions and future liquidity at handover.

Those assumptions may prove correct. They may also prove optimistic.

Our role is not to sell optimism. It is to underwrite risk.

Why off-plan yield projections can be misleading

Off-plan investments are usually sold before the building exists. This means the investor cannot yet verify several key variables:

• Actual achievable rent at handover
• Final service charge level
• Building quality and maintenance standards
• Competing supply in the same area
• Tenant demand at completion
• Resale liquidity after handover
• Furnishing and management costs
• Void periods
• Market sentiment when payments are completed

A projected gross yield may look attractive at launch, but if the rent is overstated, the service charges are higher than expected, or several competing buildings hand over at the same time, the actual net return can be materially different.

This does not mean off-plan is unattractive.

It means it should be analysed as an investment with variables, not sold as a guaranteed income product.

What EGRE publishes instead

When assessing off-plan opportunities, we do not present speculative yield as fact. Instead, we publish and discuss the assumptions behind the investment case.

Our off-plan analysis focuses on:

01 · Entry price versus comparable completed stock

We compare the launch price against completed properties in the same or comparable locations. If an off-plan unit is priced above existing completed stock, the investment case needs to justify why.

That may be because of superior design, payment plan, location, developer quality or future scarcity. But the premium must be explained, not assumed.

02 · Developer track record

The developer matters. Delivery history, build quality, service charge behaviour, resale performance and brand perception all influence future liquidity.

A strong developer can support both end-user demand and resale confidence. A weaker developer may require a larger margin of safety.

03 · Payment plan quality

A payment plan is not value by itself. A long or flexible payment structure can be useful, but only if the purchase price remains sensible.

Sometimes the payment plan is simply priced into the unit. In those cases, the buyer may not be receiving a discount — they may be paying more for delayed capital deployment.

We assess whether the payment plan improves the investment case or merely disguises a higher entry price.

04 · Future rental range, not fixed yield

For off-plan, we prefer to show a realistic rental range rather than a fixed yield.

That range should be based on current rents for comparable completed buildings, adjusted for likely handover timing, building quality, location, supply and tenant demand.

Even then, it remains a forecast — not a fact.

05 · Net return sensitivity

A responsible off-plan model should show how the return changes if assumptions move.

• What happens if rent is 10% lower than projected?
• What happens if service charges are higher?
• What happens if the unit remains vacant for one or two months?
• What happens if resale demand is weaker at handover?

A good investment should still make sense under conservative assumptions. If the return only works in the best-case scenario, the risk should be made clear.

Off-plan is not one strategy

Not all off-plan buyers are buying for the same reason.

• Some are buying for capital growth before completion.
• Some are buying for a future rental asset.
• Some are buying for lifestyle or relocation.
• Some are buying because of payment-plan flexibility.
• Some are speculating on a district's future maturity.

Each of these strategies requires different underwriting.

A capital-growth buyer may care more about entry price, developer reputation and resale demand before handover.

A rental investor must care more about future rentability, service charges, furnishing costs and tenant profile.

A lifestyle buyer may accept a lower financial return in exchange for design, location or personal use.

The issue is not whether off-plan is good or bad. The issue is whether the buyer understands what they are actually buying.

Why we avoid false certainty

The Dubai market is highly dynamic. Areas can mature quickly, rental demand can shift, handover supply can change the balance of a sub-market, and buyer sentiment can move faster than headline prices.

For that reason, EGRE avoids presenting off-plan returns with false certainty.

We will not say:

"This property gives an 8% yield."

If the property is not yet completed and not yet rented, that statement is not evidence-based.

Instead, we will say:

"Based on comparable completed stock today, the projected rental range may support a potential gross return of X to Y, subject to handover timing, service charges, furnishing, void periods and market conditions."

That is less sensational. It is also more honest.

EGRE view

Off-plan can be a strong part of a Dubai investment strategy when the entry price, developer, payment plan, location and exit route are properly assessed.

But off-plan should not be sold using completed-property language.

A completed, tenanted asset may have an evidenced yield.

An off-plan asset has a projected return scenario.

At EGRE, we believe investors deserve to know the difference.

Our methodology is simple: we analyse off-plan opportunities through pricing evidence, comparable completed stock, developer track record, payment-plan quality, rental sensitivity and exit liquidity. Where the assumptions are strong, we say so. Where the investment case depends on optimistic projections, we say that too.

Because in real estate, a projection is not a yield until the market proves it.