How to write an off-plan feasibility report your investor can trust

An investor looking at an off-plan unit in Dubai or Abu Dhabi asks the same questions every time. What does it really cost me? What will it earn once it is let? How much cash do I need before the keys? What if I take a mortgage? What is it worth if I hold it for ten years? A feasibility report answers those questions on one set of figures, laid out so the client can follow each step.

The report is not a valuation and it is not a forecast. It is arithmetic on assumptions that you and the client agree on. That is what makes it useful: when the client asks what happens if rents are 10% lower, you change one figure and every line follows. When two investors disagree on growth, each can see their own version.

The price on the developer's sales offer is not what the investor pays. Add every cost of buying and you have the total cost, which is the base for most of the sums that follow.

1. The purchase price of the unit, from the developer's price list or sales offer.
2. The 4% transfer fee charged by the land department. On off-plan units it is usually due at or soon after booking; the developer's sales offer says when.
3. Admin and registration fees, which vary by developer and by price band. Take them from the sales offer rather than from memory.
4. Any other one-off costs the client has agreed to, such as a fit-out on a commercial unit or furniture for a short let.

On a ready (secondary) unit the agency's commission is usually part of the cost too. On most off-plan launches the developer pays the agency, so it is not added, but say which applies.

Gross yield is the annual rent divided by the price. It is the number most people quote, and it flatters every unit, because the owner pays the service charge out of that rent. Net rent is the annual rent less the service charge, and the net return is net rent over the price (or over the total cost, if you prefer the stricter figure). Say which one you show, and keep to it across every unit you compare.

• Service charge is quoted per square foot per year. Multiply it by the unit's size.
• Take the expected rent from units like it that are already let, and say where it came from.
• For a short let, work from a nightly rate times the nights a year it is likely to be let, then take off the management fee and the utilities.
• For a commercial unit, remember the 5% VAT on the price and the fees, and the fit-out cost before it can be let.

Growth is the figure clients care about most and the one you know least about. Treat it as an input, not a result. Choose a growth rate a year, show it on the page, and work the value forward from the total cost for the years to handover and beyond.

A common mistake is to show the growth on the price but the cost on the total. Use the same base for both. Another is to quote growth as a total over many years next to a yield that is per year; keep everything per year, or show both clearly labelled.

Off-plan is bought with a payment plan, so the investor does not need the whole price at once. What they need to know is how much cash goes in before handover, when, and what is still owed afterwards. Work it from the developer's plan: the share paid during construction, the share on handover, and any share paid after the keys.

Monthly plans need care. A plan of 1% a month for 80 months does not end at handover if handover comes in month 36: part of it is paid after the keys. Count the months from booking against the expected handover date and split the plan where they cross. Our guide to off-plan payment plans works through this in detail.

If a share is paid after handover while the unit is let, compare the yearly instalments with the net rent. When the instalments are larger, the investor tops up the difference every month until the plan ends. Show that gap in dirhams a year and a month. It is often the line that decides whether a post-handover plan suits the client.

Many investors finance part of the purchase once the unit is complete. Banks set limits on how much they lend, which depend on the buyer's residency and the property's price, so take the loan share from the client's own bank. With the loan share, the interest rate and the term, work out the yearly payment, then show the cash flow after the mortgage: net rent less the payment.

• Show the interest rate on the page. A return after the mortgage means nothing without it.
• Split the first year's payment into interest and capital if the client asks why the cash flow is thin. Part of each payment is the client paying off their own loan.
• Show the return on the cash the client actually put in, not on the price. That is the figure that changes when a mortgage is used.

One headline number hides how a property behaves over time. A short table does better: for each holding period, the value on your growth assumption, what is left on the mortgage, the rent collected over the years, the profit, and the return a year.

IRR (internal rate of return) is a useful line to add. In plain words, it is the steady yearly interest rate that would turn the client's cash in into the same cash out, counting when each dirham went in and came back. It eases off the longer a unit is held, which is normal and not a sign the investment is getting worse. Inflation is worth one line too: rents and service charges tend to rise over the years, and a value in today's money shows what the future figure buys.

Here is the whole sheet for a made-up 1 bedroom unit at a made-up project called Harbour View, with round figures. It is an illustration of the method, not a statement about any real unit or area.

With a 50% mortgage at an assumed 4.5% over 25 years, the loan of AED 750,000 costs about AED 50,580 a year. Net rent of AED 82,000 less that payment leaves AED 31,421 a year. The client's cash in is the total cost less the loan, AED 814,000, so the cash return a year is about 3.9%, before any growth. That is the kind of line a client needs to see next to the headline yield.

1. Open with the unit, the price and the three figures that matter most to this client: the return, the cash before the keys and what it looks like held for ten years.
2. Put the assumptions in one place, labelled as assumptions: rent, growth, service charge, the mortgage rate and the years held.
3. Show the payment schedule month by month with the running total, so the client can plan their cash.
4. If you compare units, use the same assumptions for each, and say where a unit differs (a different plan, a different handover).
5. Add the price in the client's own currency if they think in dollars, pounds or euros, and say the rate is the day's conversion.
6. Close with a plain note that the figures are illustrations and the client should take their own advice.

Key Deal keeps a feasibility sheet for each unit type on the listing and works out every line above as you type: total cost, net rent and return, growth, cash before the keys, the gap after handover, the mortgage and the holding years from 5 to 25 with IRR and inflation. The property feasibility report comes out as a branded PDF with your name and contact on it, in a minute.

• Change any figure for one client (their rent, their growth, their mortgage) without touching the listing.
• Add the figures in US dollars, pounds, euros or Australian dollars beside the dirhams.
• Fill a sheet in from the developer's sales offer instead of retyping it.
• Put two to four units side by side in a property comparison report, with the feasibility for each.
• Keep the unit prices current from the developer's list with off-plan inventory.

You can also ask through the Claude connector: describe the unit and the client, and Claude makes the report link for you.