Drop a US cost-of-equity into a GCC valuation and you will misprice the asset. The capital-asset-pricing inputs that travel from a textbook do not reflect where the business actually earns and bears risk. We build it up, component by component.
Start from the right risk-free rate
The risk-free rate should match the currency of the cash flows. For AED- or USD-pegged cash flows we anchor on a long US Treasury yield, then layer a country risk premium for the specific GCC market — not a blanket “emerging markets” figure. The peg matters: a dirham cash flow does not carry the same currency risk as a free-floating emerging-market currency.
Then the premia that actually apply
On top sit the equity risk premium, a size premium for smaller private companies, and a company-specific premium for concentration — single-customer, single-asset or key-person risk, which is common in family-owned GCC businesses. Each should be argued, not borrowed. A build-up you can defend line by line is worth more than a precise-looking number you cannot.
General valuation guidance for UAE/GCC practitioners; calibrate every input to the specific asset and date.