Value-Add
Value-add strategy acquires underperforming properties and implements operational improvements, renovations, or repositioning to increase NOI and property value.
| Value-Add Tactic | NOI Impact |
| Renovation and upgrade | NOI Impact |
| Reduce operating expenses | Lower expense ratio 5% to 10% |
| Improve occupancy | Fill vacant units, reduce turnover |
| Add revenue sources | Parking, storage, amenities fees |
| Repositioning | Change use or target market |
| Professional management | Optimize operations and leasing |
| Value Creation Math | Example |
| Purchase NOI | AED 60,000 |
| Purchase price at 6% cap | AED 1,000,000 |
| Improvement cost | AED 150,000 |
| Stabilized NOI after improvements | AED 80,000 |
| Exit value at 5.5% cap | AED 1,455,000 |
| Total return | AED 305,000 (26.5% on total cost) |
Related Terms
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