What to take into your next appraisal
- Hold land cost and comparison date constant.
- Check that each design is permitted before comparing its returns.
- Use margin, peak equity and timing together when choosing a scheme.
Establish what the site can support
Start with plot-specific controls, setbacks, access, parking and service requirements. Obtain the relevant design and authority confirmation for each option. Dubai Municipality’s permit guidance provides a process reference, while the actual plot evidence determines which scheme can proceed.
Define whether cost includes pools, landscape, private roads, external works, utility connections and shared facilities. A villa estimate excluding external works cannot be compared fairly with a townhouse estimate that includes them.
Use evidence for the actual product
Screen DLD records by property type, project, size and registration type before adopting sales assumptions. Separate the evidence for the completed villa product from an off-plan townhouse payment plan. Unit price alone may conceal different plot sizes, build areas or payment terms.
For each design, reconcile homes to built area and saleable inventory. Record which price includes parking, landscape or furnishing and which items remain the buyer’s responsibility.
Worked example: same site, different product
The following is fictional. Both options use land costing AED 20m and exclude finance and tax. Villas provide 20 homes at AED 4m each; townhouses provide 32 homes at AED 2.6m each. The cost allowances cover equivalent scope.
Townhouses create AED 3.2m more revenue but AED 5m more non-land cost. The villa option therefore produces AED 1.8m more pre-finance surplus. Neither set of prices is a Dubai market benchmark.
| Measure | 20 villas | 32 townhouses |
|---|---|---|
| Revenue | AED 80.0m | AED 83.2m |
| Land | AED 20.0m | AED 20.0m |
| Build and external works | AED 38.0m | AED 42.0m |
| Other development costs | AED 8.0m | AED 9.0m |
| Total cost | AED 66.0m | AED 71.0m |
| Pre-finance surplus | AED 14.0m | AED 12.2m |
| Margin on revenue | 17.50% | 14.66% |
Allow delivery and sales timing to change
Now phase construction and sales for each option. Larger homes may involve different build duration and buyer demand; more units may support phased releases but also require more transactions. These are research questions, not assumptions to settle from the product label.
If villas complete six months later, their apparent surplus advantage may shrink after carry and deferred receipts. If townhouses require common infrastructure before any handover, their first phase may have the larger equity requirement despite smaller individual homes.
Show the break-even question
At unchanged townhouse costs, revenue would need to reach AED 85m to equal the villas’ AED 14m surplus. That implies AED 2.65625m per townhouse, about 2.16% above the assumed AED 2.6m. Compare that required increase with actual evidence before selecting the option.
Present the two programmes, peak funding needs and downside sales cases with the surplus comparison. The decision should remain traceable to feasible designs and supported prices.
Sources and further reading
- Building Permit Procedures Dubai Municipality
- Real Estate Data Dubai Land Department
- Valuation of development property RICS
Published by Feasly. How we prepare our guides. Suggest a correction.
