How to Calculate Rental Yield in Dubai Properly, Including the Costs Most Calculators Omit
Every Dubai listing quotes a yield. Almost none of them quote a net one, and the difference between the two is where an investment either works or quietly does not.
The arithmetic is not difficult. The discipline is in refusing to leave anything out.
Gross Yield: the Number Everyone Quotes
Gross yield = annual rent divided by purchase price, expressed as a percentage.
An apartment bought at AED 1,200,000 letting at AED 90,000 a year has a gross yield of 7.5%.
It is a useful screening number and a misleading decision number, because it ignores every cost of owning the asset.
Net Yield: the Number That Decides
Net yield = (annual rent minus annual costs) divided by total acquisition cost.
Two corrections there, and both matter.
Costs come out of the rent. Service charges, management, maintenance, insurance and an allowance for vacancy.
The denominator is total acquisition cost, not the purchase price. You did not spend AED 1,200,000. You spent that plus the 4% transfer fee, the commission, the trustee fee, the mortgage costs if any, and whatever you spent making the unit lettable.
The Costs That Belong in the Calculation
| Cost | Typical figure |
| Service charge | AED 10 to 35 per square foot per year, by district and building |
| Property management | 5% to 8% of annual rent, where used |
| Letting or tenant-finding fee | commonly 5% of annual rent, or one month |
| Maintenance and repairs allowance | 5% to 10% of rent as a working assumption |
| Vacancy allowance | 4% to 8% of rent, or two to four weeks a year |
| Landlord insurance | AED 1,000 to 3,000 a year |
| Chiller or cooling standing charges | where the landlord bears them |
Vacancy is the one investors leave out most often, and it is the one that will definitely happen. Even a well-let unit turns over, and each turnover costs a few weeks of rent plus a letting fee.
A Worked Example
A 950 square foot one-bedroom in a mid-market Dubai district.
| Line | Amount |
| Purchase price | AED 1,200,000 |
| DLD transfer fee, 4% plus admin | AED 48,580 |
| Agency commission, 2% plus VAT | AED 25,200 |
| Trustee office fee plus VAT | AED 4,200 |
| Furnishing and making good | AED 25,000 |
| Total acquisition cost | AED 1,302,980 |
| Annual rent | AED 90,000 |
| Service charge at AED 15 per sq ft | AED 14,250 |
| Management at 6% | AED 5,400 |
| Maintenance allowance at 6% | AED 5,400 |
| Vacancy allowance at 6% | AED 5,400 |
| Insurance | AED 1,500 |
| Total annual costs | AED 31,950 |
| Net annual income | AED 58,050 |
Gross yield: 7.5%. Net yield on total cost: 4.45%.
Nothing unusual happened in that example. No disaster, no bad tenant, no special levy. That is simply what the 7.5% headline means once it is expressed honestly.
Where Leverage Changes the Picture
With a mortgage, the calculation changes shape because you are measuring return on your capital rather than on the asset's price.
Cash-on-cash return = (annual rent minus costs minus mortgage interest and principal) divided by cash invested.
A 4.45% net yield with a mortgage at 4% produces a small positive spread and amplifies it against a smaller capital base. The same mortgage at 5.5% against a 4.45% net yield produces negative cash flow, which is a legitimate strategy only if you are explicitly buying for capital appreciation and can fund the shortfall indefinitely.
Model it before you commit, not after the first year.
The Comparisons That Actually Help
Compare net to net. A 9% gross in a building with AED 28 service charges may well be worse than a 7% gross in one with AED 12.
Compare to the alternative. Dubai net yields of 4.5% to 6% should be measured against what the same capital does elsewhere, including risk-free alternatives.
Separate income from capital. They are two different returns with two different risk profiles. Adding them into one number hides which one you are relying on.
Frequently Asked Questions
What is a good rental yield in Dubai?
Gross yields commonly run 5% to 9% depending on district and unit type. A net yield of 5% or above after all costs is a solid result, and anything presented as 9% net deserves scrutiny.
What is the difference between gross and net rental yield?
Gross yield is annual rent divided by purchase price. Net yield subtracts service charges, management, maintenance, vacancy and insurance from the rent, and divides by the total acquisition cost including fees.
Do service charges come out of rental yield?
Yes. In Dubai the owner pays the service charge, not the tenant, and it is usually the single largest deduction from gross rent.
Should I include the 4% DLD fee in a yield calculation?
Yes. It is part of what the asset cost you, so it belongs in the denominator. Excluding it flatters the yield by a few tenths of a percentage point.
How much should I allow for vacancy in Dubai?
Four to eight per cent of annual rent, equivalent to two to four weeks, is a reasonable working assumption for a well-located unit, and more in districts with heavy new supply.
Does a higher yield mean a better investment?
Not by itself. High gross yields often come with high service charges, weaker capital growth or a thinner tenant pool. Compare net yields, and consider income and capital appreciation separately.
The Short Version
Calculate net yield on total acquisition cost, put vacancy and management in the model even if you intend to self-manage, and pull the actual service charge for the actual building rather than using a district average. Do that and Dubai still compares well internationally. Skip it and you have bought a 4% asset believing it was a 7% one.
Figures are illustrative of market conditions at the time of writing in September 2026. Costs vary by building, district and unit. Confirm current figures with a licensed agent before relying on them.
