Scheme 1 for Property Price Indexes v.1
Updated on
Scheme 1 — Direct Median Transaction Index
Scheme 1 is the baseline methodology used in the Property Price Indexes (PPI) system for calculating residential and commercial property indicators across Dubai communities, master projects and individual developments.
The methodology is based on directly observed Dubai Land Department (DLD) transactions and Ejari rental contracts, using transaction-level filtering, median aggregation and deterministic geographic hierarchy logic.
Core Principles
Scheme 1 follows several core principles:
- Observed market transactions only
- Median-based aggregation
- Monthly transaction periods
- Independent subtype segmentation
- No hedonic modeling
- No synthetic AI-generated pricing
- Transparent deterministic calculations
The methodology prioritizes transparency, reproducibility and robustness against outliers over statistical complexity.
Geographic Levels
Indexes are calculated independently for:
- Communities
- Master Projects
- Development Projects / Buildings
Each geographic level aggregates only transactions assigned to that level. No cross-level averaging is applied.
Market Segmentation
The system calculates indexes independently for:
Residential
- All Residential
- Flats
- Villas
- Stacked Townhouses
Commercial
- All Commercial
- Offices
- Shops
- Showrooms
Industrial, warehouse, workshop and land transactions are excluded from price index calculations.
Transaction Filtering
Only valid market transactions are included in Scheme 1.
Sales
Included:
- Ready / existing property transactions
- Observed completed sales
- Valid transaction values
- Valid property areas
Excluded:
- Off-plan transactions
- Land
- Industrial assets
- Warehouses
- Workshops
- Invalid area records
- Extreme invalid outliers
Rent
- Registered Ejari rental contracts
- Valid annual rent values
- Valid property areas
Base Metric
For each transaction:
Price per sqm = Transaction Value / Area
For rental contracts:
Rent per sqm = Annual Rent / Area
Aggregation Logic
All valid transactions within the same:
- Month
- Area
- Segment
- Subtype
are aggregated using:
Median Price per sqm
Median aggregation is intentionally used because it provides stronger resistance against:
- Luxury spikes
- Distressed transactions
- Outliers
- Thin-market anomalies
ALL Segment Logic
Combined indexes such as:
- All Residential
- All Commercial
are calculated directly from pooled transaction sets.
They are NOT calculated as arithmetic averages of subtype indexes.
Example:
Residential ≠ Average(Flats, Villas, Townhouses)
Instead:
Residential = Median(All Residential Transactions)
This preserves real market weighting and prevents subtype distortions.
Cap Rate
Cap Rate is calculated using observed aggregated rent and sales indicators.
Cap Rate = Annual Rent Price per sqm / Sale Price per sqm
Cap Rate is expressed as annual percentage yield.
Cap Rate is calculated only when both:
- Observed sale values
- Observed rent values
exist for the same period and segment.
Currency Logic
Primary calculations are performed in AED.
USD values are derived using fixed AED/USD conversion:
USD = AED / 3.6725
Data Sufficiency
The methodology applies minimum transaction sufficiency thresholds.
If transaction count is insufficient:
- Values may remain null
- LOCF may be applied in smoothed mode
- Interpolation may be used for short gaps
Observed values are always prioritized over synthetic continuity methods.
Outlier Protection
Scheme 1 uses:
- Transaction-level validation filters
- Subtype-specific thresholds
- Median aggregation
to reduce abnormal observations while preserving real market movements.
Strengths
- Transparent methodology
- Transaction-based calculations
- Deterministic reproducibility
- Strong outlier resistance
- Independent subtype calculations
- Production-grade geographic hierarchy
Limitations
- Thin markets may remain volatile
- Luxury segments may show sharp fluctuations
- No hedonic quality adjustment is applied
- Dependent on DLD and Ejari reporting quality
Intended Use
Scheme 1 is designed for:
- Market analytics
- Research platforms
- API distribution
- Investment analysis
- Pricing benchmarks
- Portfolio monitoring
The methodology is not intended to replace formal valuation or appraisal reports.