Gross vs Net Rental Yield in Dubai: How to Calculate It From a Real Listing

The Short Answer

Step 1: Work Out Gross Yield

Step 2: List the Yearly Costs

Step 3: Add the Buying Costs to the Price

A Worked Example

Why Two Properties With the Same Gross Yield Can Differ

What a Yield Does Not Tell You

Checklist Before You Trust a Yield Figure

Talk to Banke

Dubai Real Estate Insights · Investing Gross vs Net Rental Yield in Dubai: How to Calculate It From a Real Listing A Dubai listing that promises a "7% yield" is almost always quoting the gross figure: annual rent divided by price. What lands in your account is the net figure, after service charges, management, vacancy and other costs. The gap between the two can be

large. This Banke UAE guide shows how to calculate both numbers from a real listing, which costs to include, and how to compare two properties fairly. We use round numbers as an illustration only. The Short Answer Gross yield is annual rent divided by the purchase price. Net yield is annual rent minus your yearly costs, divided by the total amount you paid, including the

buying costs. Net yield is the number that tells you what the property earns for you. Step 1: Work Out Gross Yield Take the annual rent and divide it by the price. If a studio is listed at AED 800,000 and similar units are rented at AED 56,000 a year, the gross yield is 56,000 divided by 800,000, which is 7%. Use rent that tenants

are actually paying for comparable units in the same building, not the highest asking rent in the advert. Check the rent against the Ejari-registered contracts and the RERA rental index where you can, and ask the agent for the evidence. Our guide to Banke guide: Ejari registration in Dubai explains what the registration shows. Step 2: List the Yearly Costs Net yield needs every cost

that comes out of the rent. For most Dubai apartments the list is: Service charges. Set per square foot by the building and approved under the rules for the community. Ask for the latest invoice, not the developer's brochure figure. See Banke guide: understanding service charges in Dubai . District cooling. In some communities this is billed separately and the owner pays when the unit

is vacant. See our note on Banke guide: district cooling fees . Property management. If you hire a manager, they usually charge a percentage of rent or a fixed fee. Read Banke guide: what landlords pay for in property management . Maintenance and repairs. Allow a yearly amount for the things the tenant is not responsible for under the tenancy contract. Vacancy. No property is

rented 365 days a year. Allow a gap between tenants, especially if you plan to change the rent. Insurance and letting costs. Building or contents cover where it applies, plus any agent fee for finding a tenant. Step 3: Add the Buying Costs to the Price For net yield, divide by what you actually spent to acquire the property, not only the headline price. That

includes the Dubai Land Department transfer fee, the agent's commission if you pay one, trustee and registration fees, and any mortgage arrangement costs. Our explanation of the Banke guide: DLD 4 percent fee shows how that part works. A Worked Example Imagine an apartment bought for AED 1,000,000 that rents for AED 70,000 a year. The gross yield is 7%. Now assume AED 12,000 in

service charges, AED 3,500 in management, AED 3,000 for repairs and AED 4,000 for a month or so of vacancy and letting costs. Yearly costs total AED 22,500, so rent after costs is AED 47,500. If buying costs added AED 45,000, the total outlay was AED 1,045,000, and the net yield is about 4.5%. These figures are invented to show the method. Your own numbers

will differ, and you should replace every line with a quote or an invoice before you decide. Why Two Properties With the Same Gross Yield Can Differ A building with high service charges can show a lower net yield than a cheaper-to-run building with the same rent. Properties that are hard to let sit empty for longer, which cuts the real income. A mortgage changes

your return on cash invested, but it does not change the property's net yield. Compare the two ideas separately. What a Yield Does Not Tell You Yield measures income only. It says nothing about whether the price will rise or fall, how easy it will be to sell, or whether rents will hold. A high yield can mean the market sees more risk in that

building or area. Treat any yield figure as one input and read our Banke guide: guide to rental yield by area alongside it. Checklist Before You Trust a Yield Figure Is the rent a signed, registered contract or just an asking price? Is the yield gross or net, and does the seller say which? Have you seen the latest service charge invoice? Have you included