Capital appreciation is the difference in current market price versus the price that the property was purchased upon. For instance if a property has been purchased for AED 1 million 2 years back (or when it was offplan) and now once the property is ready the current market price has become AED 1.2M then the capital appreciation of this property is 20%.
When investing in properties, apart from the rental yields, the capital appreciation play an eminent role in deciding on the property to opt for, because at times the potential of capital appreciation of a property exceeds the rental returns which eventually results in higher earning.
More interestingly, the Capital Appreciation of a property does not depend on a sole factors, but there are various parameters that vary the demand, price and thus ratio of appreciation. These factors would include (but may not be limited to): demographics in the region, infrastructure, security, quality of construction, availability of education and healthcare and public transportation accessibility.
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