Annual appreciation: projected growth in the market value of the asset over 1 year
For example, consider a property that is acquired at a price of AED 1,000,000 with buying costs worth AED 100,000. The total investment amount is AED 1,100,000.
Assuming the property is sold after a few years at a price of AED 1,500,000 (net of selling costs), the capital appreciation is AED 400,000, or 36.4% (i.e. AED 400,000 / AED 1,100,000).
Annualised return: Total ROI over 5 years (rental income/net yield + annual appreciation) however averaged on an annual basis.
Our properties usually have around a 50% total ROI over 5 years, so averaging out over a yearly basis is around 10%.
Dividend: The payout an investor in an asset receives after subtracting all costs.
For example, in the case of 10 investors co-owning a property, the dividend is the payment each investor receives. It is the total rent generated by the property divided by 10 (minus all costs).
Gross yield: projected annual percentage return that investment generates before deducting all expenses, like management fees and maintenance costs
For example, if a property is priced at AED 1,000,000 and rented for AED 100,000 per year, that property generates a gross income of AED 100,000 and a gross yield of 10%.
Funding target: The capital required to be raised in order to complete the purchase of the property.
For example if a fund is looking to purchase a property at a price of AED 1,000,000 and executing the transaction incurs costs of AED 50,000 the funding target will be AED 1,050,000.
Net yield: projected annual percentage return that investment generates after all expenses are deducted.
For example, consider a property that is priced at AED 1,000,000 and rented for AED 100,000 per year, and has costs of AED 25,000 per year. The property generates a net income of AED 75,000 and a net yield of 7.5%.
ROI (Return on Investment): The ratio of the price differentials of an asset at the end of a period plus all the income generated by an asset to the original price paid for that asset.
For example a property that is purchased for price A and sold after 5 years for price B, the ROI is:
[B-A+Rental income during the 5 years]/A.
SPV (Special Purpose Vehicle): A company created for the purpose of executing a single transaction.
In the case of Stake every property will be purchased through an individual SPV. This allows us to streamline the investment process through granting shares in the property's SPV to its shareholders.
Title deed: An official document registered with the real estate regulator validating the owner/ owners of a property.
Transaction costs: The additional costs incurred during the execution of a deal in addition to the asset purchase price.
For example, purchasing investment property in Dubai requires paying transfer fees, registration fees, and some additional charges like valuation and KYC charges.