Mr. Anand buys a fine-looking 2 bedroom apartment at Marina Heights for AED 1,700,000. He is able to secure financing with HSBC at 80% LTV over a 20 year repayment period.

Henceforth the loan/mortgage amount is 80% of 1,700,000 that is 1,360,000.

Original Investment:
He makes a down payment of AED 340,000 to make up the difference. A typical repayment mortgage interest rate for the Dubai market is 8.5% annually.

Financing Cost:
The monthly mortgage repayment is:
Interest only Mortgage
1,360,000 (loan/mortgage amount) * 0.085 (Interest rate) = AED 115,600 / 12 (months)
= AED 9,633 per month.
Repayment Mortgage
Including the repayment portion of the loan = 143,712 / 12 (months) = AED 11,976 per month

Rental Income:
Typical rental income for a 2 bedroom apartment at Marina Heights is AED 140,000 annually which is a rental yield of around 8.24%. A benefit to rent property in Dubai is that rents are paid annually and in advance.

Net income from rent is:
Interest only Mortgage: 140,000 (Rental income) – 115,600 (Mortgage payment) =
AED 24,400

Mr. Anand receives a net income of AED 24,400 annually.
Repayment Mortgage: 140,000 (Rental income) – 143,712 (Mortgage payment) =
AED -3,712

Mr. Anand pays a difference of AED 3,712 if he opted for the re-payment mortgage.

Looking at property selling prices over 2005 and 2006, property has appreciated 25% on average annually in Dubai.
 
Capital Appreciation:
 Increase of 25% annually: 1,700,000 * 0.25 = 425,000

Return on Investment: Mr. Anand had a fruitful return of 132% on his initial investment of
AED 340,000 in just 2 years. 

Interest only Mortgage: 24,400 (Rental return) + 425,000 (Capital appreciation) =
AED 449,400
Return on Investment: 449,400 / 340,000 (Down payment) = 132%
 
Mr. Anand still had a beneficial return of 123% on his initial investment of AED 340,000 if opted for the re-payment mortgage.
Re-payment Mortgage: -3,712 (Rental return) + 425,000 (Capital appreciation) =
AED 421,288

Return on Investment: 421,288 / 340,000 (Down payment) = 123%
 
In either case Mr. Anand took advantage by investing in the Dubai property market and Dubai is still a growing and an appreciating market of the future.