Dubai property yield: how much is left after costs

Gross yield, net yield, and total return

Three terms get mixed up. Keeping them apart is most of the work.

• Gross yield is annual rent divided by the purchase price. It ignores every cost, so it always flatters.
• Net yield is annual rent minus annual running costs, divided by your total acquisition cost (price plus the one-off buying costs). This is closer to what you keep.
• Total return adds any change in the property's value to the rental income. Capital growth is not income and is not guaranteed, so keep it separate from yield.

It also matters whether you quote an annual figure or a cumulative one over several years, and whether you use a mortgage — leverage changes the cash return, in both directions.

The costs between gross and net

These are the items that turn a gross yield into a net one. Budget for all of them, even the ones that do not occur every year:

• Annual service charges — often the largest, billed per square foot and very building-specific. See how to check them before you buy.
• Property management — if you use a manager, commonly a single-digit percentage of the rent.
• Maintenance and repairs — a yearly allowance, plus occasional larger items.
• Vacancy — periods between tenants when there is no rent but costs continue.
• Insurance, and any owners'-association or renewal costs.
• If financed, mortgage interest — which reduces the cash you keep.

The formulas, and an illustrative calculation

The maths is simple; the discipline is using honest inputs.

• Gross yield = annual rent / purchase price
• Net yield = (annual rent − annual running costs) / total acquisition cost

The example below is illustrative only. The figures are hypothetical round numbers chosen to show the method, not market data or a projection for any property.

Now an adverse case on the same property: two months vacant, a higher service charge and an unplanned repair might lift annual costs to AED 45,000 and cut rent received to AED 87,500, giving net income of about AED 42,500 and a net yield near 2.6%. Same asset, very different outcome — which is why a single gross number should never drive the decision.

These numbers are illustrative inputs to demonstrate the calculation. Gross yields in Dubai are commonly discussed in a mid- to high-single-digit range that varies by area, building and segment; always run your own net figure on verified rent and charges for the specific property.

How a mortgage changes the picture

Borrowing reduces the cash you put in, which can raise the return on your own capital when rent comfortably exceeds interest and costs — and lower it, or turn it negative, when it does not. Leverage amplifies both outcomes, and your down payment as a non-resident is larger, so model it explicitly rather than assuming it helps. The financing side is covered in mortgages for non-residents, and the one-off costs in the cost of buying.

The takeaway

Judge an investment on net yield using verified rent and real charges, keep capital growth separate and never assumed, and stress-test with a vacancy and a higher-cost scenario before you buy. A property that looks strong on gross can be ordinary on net — and the gap is entirely in the costs you can check in advance.

If you would like a net-return model built on real figures for a specific apartment, including its service charges, we can prepare one with you.