The Impact of Exchange Rates on Investments in Dubai and Oman. ROI

An investor buying an apartment in Dubai or Oman often starts their analysis with the price per square meter, project standard, payment schedule, and declared ROI. This is a logical starting point, but it's not sufficient for someone financing the purchase from Poland. The true investment return is only realized when the purchase price, off-plan installments, rental income, management costs, taxes, and subsequent sale are converted into the currency in which the investor measures their wealth. For many Polish entrepreneurs and private investors, this currency remains PLN.

In Dubai and Oman, there's an additional element: exposure to the US dollar. AED and OMR are pegged to the USD, so purchasing in these jurisdictions is not just a real estate decision. It's also a decision about partially exposing your portfolio to USD/PLN. If the Polish złoty weakens against the dollar, the value of the asset, when converted to PLN, can increase even if the local property price remains stagnant. If the złoty strengthens, the return in PLN may be weaker despite stable local currency rental income.

This article organizes the practical questions worth asking before signing a SPA, paying another installment, or repatriating capital. How to separate the contract currency from the payment currency? Where does the bank spread appear? How to compare offers from banks, online currency exchanges, and currency brokers? How to calculate ROI if rent is received in AED or OMR, and taxes and the investor's portfolio are settled in PLN? And most importantly: how to ensure the currency strategy is not an afterthought but becomes part of the property's due diligence.

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In what currency are you actually paying for the property purchase?

Choice of contract currency vs. actual acquisition cost

The price in the developer's prospectus is just the first number in the model. If an off-plan apartment in Dubai is priced in AED, and a project in Oman is priced in OMR or USD, the investor should immediately distinguish between three concepts: the contract currency, the payment currency, and the currency in which they measure their return. The contract currency indicates what the price is stated in the Reservation Form, SPA, or installment schedule. The payment currency indicates what actually lands in the developer's account, escrow account, or trust account. The return currency is most often PLN if the investor lives in Poland, runs a business here, settles family assets, and compares the purchase with alternatives in Poland or Europe.

The difference between these three levels can be costly. A developer might show a price of PLN 2,000,000 as an approximate conversion, but the actual payment will be required in AED, USD, or OMR. The investor's bank will sell the currency at a commercial rate, add a spread and an international transfer fee, and an intermediary bank may charge another fee. In the OUR variant, the sender usually bears the transfer cost. In the SHA variant, costs are shared. In practice, it's not just the property price that matters, but how much actually leaves the investor's account before the developer books the full installment.

Therefore, it's worth preparing a simple table before making a deposit. First column: amount from the developer's document. Second: contract currency. Third: reference rate, e.g., from the NBP average exchange rate archive. Fourth: the rate actually offered by the bank or currency platform. Fifth: transfer commission, intermediary bank fee, and potential OUR fee. Sixth: the difference between the reference cost and the actual cost in PLN. Only such a table shows the full entry cost.

The example is simple. If an investor exchanges the equivalent of PLN 2,000,000, and the total cost of spreads and transfers is 2-3%, the difference can reach PLN 40,000-60,000. This is not a market forecast, but transaction arithmetic. For a larger purchase, it can cover part of the legal costs, a furniture package, a service charge reserve, or a portion of the final handover installment. If this amount is not factored in from the beginning, the ROI model will be overstated from the day of purchase.

During due diligence, it's worth asking the developer and advisor about five things: in what currency the deposit should be paid, whether the payment schedule allows for USD instead of the local currency, whether the recipient account has full SWIFT details, who bears the costs of intermediary banks, and whether a delay in transfer due to compliance reasons can trigger a contractual penalty. In international transactions, currency is not an administrative detail. It's a component of the price.

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Why are the UAE and Oman effectively an investment in dollars?

The fixed exchange rate mechanism and its impact on the portfolio

AED and OMR should be analyzed differently than EUR. The Central Bank of the UAE describes maintaining a fixed exchange rate of the dirham against the US dollar and indicates the operational buy and sell levels for AED against USD. The Central Bank of Oman describes the fixed peg of the Omani rial to the dollar and provides the parity of 1 OMR = 2.6008 USD. For a Polish investor, this means that the local currencies of Dubai and Oman effectively transfer a significant portion of the risk to USD/PLN.

This does not mean that the AED/OMR to PLN exchange rate is fixed. On the contrary: if USD/PLN changes, the value of the asset expressed in zlotys also changes. An apartment in Dubai may have a stable price in AED, yet show a different return in PLN. Similarly, a property in Muscat may generate rent in OMR, but when converted to zlotys, the monthly return will depend on the PLN to dollar relationship. This is particularly important for portfolios where the owner's main income is in PLN or EUR, and assets in the Gulf region operate in currencies pegged to the USD.

This mechanism can work in two ways. The strengthening of the dollar against the złoty can increase the value of the property and rental income when converted to PLN, even without local price increases. The weakening of the dollar can reduce the return in PLN despite good performance by the rental operator. Therefore, it's not advisable to enter a single exchange rate into the model and leave it untested. A better practice is to prepare three scenarios: a base rate, a rate unfavorable to the investor, and a favorable rate. Only then can one see if the purchase holds up as an asset, or if the return depends too heavily on a single assumption about the currency.

Comparison with EUR is helpful but should not be oversimplified. An investment in Montenegro or Spain provides exposure to the euro, a currency closer to some European costs and travel expenses. Dubai and Oman provide exposure to the dollar bloc. For a Polish entrepreneur, this can be a diversification tool, but only if it's conscious. If an investor views a property in Oman solely as a rental unit, they overlook the fact that their portfolio gains currency hedging against PLN. If they view it solely as a hedge, they may underestimate the property's operational risks. Both layers need to be calculated separately.

In this sense, a property in Dubai or Oman should not be evaluated solely by the question "what is the ROI?". Better questions are: what is the ROI in the local currency, what is the return in PLN under several USD/PLN scenarios, how large is the entry cost after spreads, how much does it cost to repatriate capital to Poland, and does the investor actually want to have a portion of their assets linked to the dollar? These are portfolio questions, not sales questions.

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Bank spread vs. NBP rate: Where is your money going?

Optimizing currency exchange and capital transfer costs

The NBP average rate is useful as a reference point, but it's not the rate at which an investor buys currency in a commercial transaction. The National Bank of Poland publishes average exchange rate tables and archives that help organize models and documentation. However, a bank, online exchange, or currency broker will show its own buying and selling rates. The difference between the reference rate and the execution rate is the spread. The larger the amount, the more the spread ceases to be a trivial matter.

When purchasing a property worth several hundred thousand dollars, comparing offers should not be limited to the slogan "good rate." The investor should request a quote for a specific date, specific currency, specific amount, and specific transfer mode. A bank may be convenient but more expensive. A fintech might have a good rate but transaction limits, a requirement for prior verification, a different source of funds procedure, or limitations for transfers to selected jurisdictions. A currency broker can be effective for large amounts but requires prior onboarding and AML/KYC documentation.

In practice, four items should be compared: the exchange rate, the transfer commission, the estimated costs of intermediary banks, and operational risk. Operational risk means asking whether the payment will arrive on time, whether the transfer title meets the developer's requirements, whether the recipient bank will accept the funds without further questions, and whether the investor has prepared documents confirming the source of funds. Material on financing property in Oman clearly shows that AML and KYC are part of the financing process, not a formality after the purchase decision.

The transfer title also matters. For off-plan payments, it should correspond to the documents: reservation number, project name, unit number, buyer's details, and a possible reference to the SPA. A vague transfer title might not stop a small local payment, but for large cross-border amounts, it increases the risk of compliance inquiries. It's worth establishing the title format with the developer before sending funds, not after the transfer gets stuck with an intermediary bank.

Saving on the spread is not about choosing a random cheapest platform. It's about preparing the process. First, the investor should undergo verification with selected institutions. Then, gather quotes for the same amount and currency. Next, check limits, execution times, OUR/SHA costs, the possibility of transfer confirmation, and complaint procedures. Only then is it worth comparing the net result. A 1% difference on a large transaction can be more significant than negotiating a cosmetic discount on equipment.

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How does the exchange rate affect net ROI and tax settlements?

Real profit in PLN vs. obligations to the Polish tax office

ROI in the local currency and ROI in PLN are two different metrics. If an apartment in Dubai generates rent in AED, the investor can calculate the net yield after local costs: operator, service charge, utilities, technical reserve, insurance, commissions, and potential administrative fees. This result shows whether the property is operating effectively. For an investor from Poland, the second step is equally important: converting the return to PLN, accounting for transfer costs, and assessing tax implications according to tax residency.

A Polish tax resident should consult with an advisor regarding their situation, especially with foreign income, double taxation agreements, and corporate structures. Regarding currency conversion itself, it's worth remembering the principle described on podatki.gov.pl: income in foreign currencies is converted to zlotys according to the NBP average exchange rate from the last working day preceding the day the income is earned. The Personal Income Tax Act, in Article 11a, also provides an analogous rule for costs incurred in foreign currency.

For the investor, this means the need to document exchange rates, dates, and cash flows. It's not enough to know that rent was received in AED or OMR. One needs to know the date the income was generated, which NBP rate to apply, what costs can be attributed to a given period, in what currency they were incurred, and when the operator, service charge, repairs, or insurance were actually paid. Without such a record, the tax result in PLN may differ from the result visible on the currency account.

There is also a risk that investors often only feel during tax settlement. If the local currency strengthens against PLN, the income, when converted to zlotys, may increase. This is beneficial for nominal cash flow but can increase the tax base in Poland if such income is subject to taxation in Poland. Similarly, costs incurred in foreign currency will be converted according to the relevant rates and dates. Therefore, an exchange rate register is not bureaucracy. It's a tool for controlling the net result.

An ROI model should have at least three levels. Level one: local ROI, i.e., the property's return in the rental currency. Level two: investor's ROI in PLN after spreads, transfers, and exchange rate changes. Level three: the result after taxes and documentation costs. PlanoGroups guide to foreign property taxes elaborates on this topic further, but in the context of currencies, one principle is sufficient: do not mix operational results with currency results. If the apartment is performing well, and PLN is temporarily strengthening, a weaker result in zlotys does not necessarily mean a bad property. If the exchange rate helps, do not confuse the currency effect with the asset's quality.

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How to plan installments and currency reserves for off-plan purchases?

Managing exchange rate risk in multi-year payment schedules

An off-plan purchase extends the currency decision over many months or years. The investor doesn't pay one price on one day. They pay a deposit, a first installment, subsequent installments according to the construction schedule, and often a large payment upon handover. This means each installment has its own exchange rate, its own transfer cost, and its own risk of delay. If the model assumes a single exchange rate from the reservation date, it shows a simplified picture but not the true cash flow.

The first tool is a payment calendar. For each installment, it should include: due date, amount in contract currency, estimated amount in PLN at the base rate, an alarm rate, transfer cost, and the deadline by which the investor must have the currency in their account. The alarm rate is the level at which the installment starts exceeding the investor's budget. It's not a forecast. It's a decision boundary: if the rate approaches the threshold, the investor knows whether to buy currency earlier, increase the buffer, or negotiate a different payment rhythm.

The second tool is a currency reserve. A working buffer of 5-10% is not a universal rule, but it often helps to see if the investor has a margin for PLN depreciation, intermediary bank costs, booking delays, or changes in initial fees. If the last installment is 250,000 AED, even a small change in USD/PLN can shift the cost in zlotys. With several installments, the effect accumulates. A lack of buffer can force the investor to buy currency on an unfavorable day simply because the payment deadline is stated in the SPA.

The third tool is cost averaging. Instead of waiting to exchange the entire amount until the installment date, the investor can buy currency gradually. This method does not guarantee a better exchange rate but reduces the risk of one bad date. An alternative is to hedge a larger portion of the capital immediately if the investor wants to know the cost in PLN and accepts freezing funds. The choice depends on liquidity, project schedule, investor's income currency, and tolerance for volatility.

In off-plan projects, one also needs to understand where the funds go. The Dubai Land Department describes an escrow account as a project account where buyer payments for off-plan units are deposited, intended to regulate the construction process and protect investor rights. This is an important safety element in Dubai, but it does not replace currency analysis. Escrow can organize fund flows within the project, but the investor still needs to determine the exchange rate at which they buy currency, when they send the transfer, and how they document each operation.

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Settlement model: PLN capital vs. Investment return

Comparative analysis and transaction data

A well-prepared model should show the entire journey of capital: PLN in the investor's account, currency conversion, payment to the developer, transaction costs, property operation, income and expenses in local currency, taxes, sale, and return of capital to PLN. Only then can one say whether the investment has increased the purchasing power of wealth, or just looked good in the sales folder.

The simplest mistake is comparing ROI in different currencies as if they were equivalent. If Oman shows income in OMR, Dubai in AED, Montenegro in EUR, and the investor thinks in PLN, these numbers must be unified. Not to choose the currency with the highest historical return, but to compare risk. The dollar market may offer different protection against PLN depreciation than the euro market. The euro market may be simpler for everyday cost comparisons. Each variant has a different profile.

A sample model for a studio in Muscat for 80,000 OMR should have two returns. The first shows local economics: price, purchase fees, service charge, operator, rent, CAPEX reserve, net return in OMR. The second shows investor economics: how many PLN were spent on the purchase, what was the spread cost, how many PLN corresponded to the rents each year, what exchange rate was used for tax settlements, and how many PLN would return to the investor upon sale after five years. If the sale price in OMR is the same as the purchase price, the investor can still have a positive or negative return in PLN, depending on the exchange rate. This is not speculation. It's a currency consequence.

In a comparative table, at least seven fields should be separated: initial capital in PLN, purchase amount in local currency, entry spread, purchase costs, annual net return in local currency, currency effect in PLN, and exit cost. Such a table also helps in discussions with a tax advisor, bank, and property manager. Each sees which layer they are responsible for.

Inflation in Poland should also not disappear from the model. If an investor repatriates profit from the dollar market, not only the nominal amount in PLN is important, but also the real purchasing power of these funds. A high currency return has no full value if the costs of living, financing, or alternative investments have simultaneously increased. Therefore, ROI in PLN should be part of a broader portfolio assessment, alongside liquidity, legal risk, operator quality, and exit opportunities. Analysis of guaranteed rent abroad shows a similar principle: a percentage return without a net definition is too weak to make a decision.

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PlanoGroup Experience: Currency as the foundation of return

17 years of practice in international markets

PlanoGroup communicates over 17 years of experience in the industry on its website and work in markets such as Oman, Spain, UAE, Montenegro, Saudi Arabia, and Poland. In the context of currencies, this practice is significant because purchasing foreign property rarely ends with choosing a unit. Questions about the recipient account, installment deadlines, source of funds documents, local costs, rental model, taxes, and exit strategy are needed. Without this, an investor might buy a good asset but mismanage the money flow.

Currency should be analyzed before the finishing aesthetics. The view, floor, and standard are important, but they won't answer the question of whether the investor has funds in the right currency, whether the handover installment will strain liquidity, whether net rent in OMR or AED is actually working for a PLN portfolio, and whether the future sale will generate currency conversion costs that no one has entered into the spreadsheet. This is the difference between buying a unit and managing an asset.

In advisory practice, one can encounter situations where the property choice itself was reasonable, but the return was reduced by chaotic currency conversion, late preparation of KYC documents, or a lack of an exchange rate register for settlements. One can also encounter the opposite situation: the local market did not grow particularly strongly, but dollar exposure improved the return in PLN. Both cases teach caution. The currency effect should not be confused with property quality, and property quality should not justify the lack of a currency plan.

Therefore, an advisor's role is not solely to showcase projects. It should include organizing the process: comparing locations, evaluating documents, discussing investment goals, checking the rental model, indicating entry costs, and reminding the investor that they need independent tax advice. The PlanoGroup homepage emphasizes offer selection, expert consultation, verification and formalities, and financing as elements of the process. In the article on currencies, the same logic leads to one conclusion: a currency strategy is part of investment security.

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FAQ

Can the exchange rate change the return despite a fixed rent?

Yes. If rent is paid in AED, OMR, or USD, its value in PLN depends on the exchange rate on the day of conversion. With a fixed local rent, the investor may receive a higher or lower amount in zlotys. Therefore, the model should separately show the income in the local currency and the return in PLN. Only then will it be clear whether the change comes from the property or the currency.

Why should AED and OMR be analyzed differently than EUR?

These currencies are permanently pegged to the US dollar, meaning a Polish investor should primarily analyze exposure to the USD/PLN exchange rate.

Is it worth keeping a reserve in the currency of the purchase country?

Often, yes, especially for off-plan installments, service charges, and fixed management costs. A currency reserve reduces the risk that the investor will have to buy AED, OMR, or USD at an unfavorable time simply because a payment deadline is approaching. The size of the buffer should result from the installment schedule, investor liquidity, and tolerance for exchange rate volatility.

How to calculate ROI when the purchase is in AED, and the investor thinks in PLN?

First, calculate ROI in AED: rental income minus local costs and reserves. Then, convert the investor's outlay and cash flows to PLN, accounting for spreads, transfers, exchange rates used for tax settlements, and the potential cost of repatriating capital. One percent ROI without information on currency and conversion costs is too simplified.

Is fintech always cheaper than a bank for international transfers?

Not always. Fintech may have a good rate but transaction limits, additional verification, geographical restrictions, or a longer compliance process for large amounts. A bank may be more expensive but more convenient for documentation and confirmations. A currency broker can be advantageous for larger amounts but requires prior preparation. The comparison should include the total cost and execution risk, not just the rate on the screen.