Dubai off-plan feasibility: a profitable project can still need more cash

Start with the project and the funding decision

Assume a fictional Dubai development of 48 apartments, with total sales of AED 72m. Month 1 is the land acquisition. The programme, prices, costs and collection pattern below are simplified assumptions, not evidence about a real site or current market rates.

The question is whether an assumed AED 30m of available project capital is enough. We examine the largest month-end cash shortfall before financing. We do not calculate a loan facility, equity waterfall, interest or tax. Costs and receipts within a month net together; an actual intra-month requirement can be higher.

Separate a collection from money available to pay costs

Dubai’s escrow framework makes the distinction between receipt and permitted project use important. Law No. (8) of 2007 provides for project escrow accounts. Dubai Land Department separately describes activating the disbursement mechanism. These sources do not establish one universal release timetable for a feasibility model.

For this illustration only, each collection becomes available for the stated project costs two months after receipt. A separate alternative uses five months. These delays are invented sensitivity assumptions, not legal requirements, bank commitments or recommended escrow settings. A real project needs its own payment plan, account terms and confirmed disbursement conditions.

The Feasly Calculation Engine calculates sales receipts, project costs and monthly project cash flow. We then prepare a separate cash-availability schedule: opening restricted cash plus collections less amounts becoming available equals closing restricted cash. Each amount is counted once. This illustrates a financial question; it does not demonstrate automated escrow-account management in Feasly.

Sources: Dubai Legislation Portal: Law No. (8) of 2007 concerning project escrow accounts; Dubai Land Department: Escrow account activation

Compare profit with the capital required

The base has AED 64.4m of total costs and AED 7.6m of nominal profit. If every receipt were immediately usable, the engine-calculated project shortfall would peak at AED 23.17m. Applying the separate two-month availability assumption raises the illustrated requirement to AED 27.90m.

The collection-delay case moves collections and the selling-cost schedule six months later; the other cost dates stay fixed. The availability-delay case changes only the delay from collection to usable cash. The cost case raises construction from AED 40m to AED 44m and leaves other assumptions unchanged.

Follow the base through its pressure points

Collections start in month 7, but the assumed usable amounts start in month 9. At the end of month 8, AED 6m has been collected and remains restricted in this illustration. The difference between the two cumulative cash views is exactly that restricted balance.

The full monthly downloads extend beyond the last collection until the assumed cash restriction unwinds. At the end, all receipts have become available and both cumulative cash views reconcile to the same before-finance, before-tax profit.

• Base: monthly cash flow (CSV)
• Collections six months later: monthly cash flow (CSV)
• Longer availability delay: monthly cash flow (CSV)
• Construction cost +10%: monthly cash flow (CSV)
• All assumptions and monthly cases (JSON)

Return to the decision

Against the hypothetical AED 30m capital limit, the base fits by AED 2.10m. Later collections exceed it by AED 11.50m, and the longer availability delay exceeds it by AED 5m. Both still show AED 7.60m nominal profit. Profit alone would miss the funding problem.

Higher construction cost reduces profit to AED 3.60m and leaves only AED 1.10m of headroom under that same capital limit. The alternatives here are separate sensitivities. Combine adverse changes and establish financing, taxes, payment terms and a liquidity reserve before deciding what a real project can support.

Use this example to structure the questions, not to price a Dubai site or approve an acquisition. Test the actual project documents and applicable local requirements, and agree the supported modelling treatment before relying on a result.