How to calculate rental yield in Dubai
Work through a clear Dubai rental example, separate gross yield from net yield, and account for vacancy, fees and mortgage payments.
Published · Updated · 2 min read
Rental yield is useful only when the numerator and denominator are clear. A percentage based on advertised rent and purchase price answers a different question from one based on collected rent, operating costs and the full capital you have invested.
Start with a unit-level estimate. Use comparable properties with similar layouts, condition and tenancy terms. The DLD rental index can provide a reference, but it does not guarantee the rent your apartment will achieve or how quickly a tenant will move in.
Gross yield: the first calculation
Gross rental yield equals annual rent divided by purchase price, multiplied by 100. For a hypothetical AED 1.5 million apartment rented for AED 105,000 a year, the gross yield is 7%.
That figure ignores transaction expenses, vacancy and operating costs. State whether the rent is an existing contracted amount, a recently achieved comparable or an estimate. An optimistic listing is not the same evidence as a collected rental payment.
Net yield: include ownership costs
Suppose the same illustrative purchase needs AED 100,000 in acquisition and setup costs, bringing total invested capital to AED 1.6 million. Assume annual vacancy and collection losses of AED 5,000, service charges of AED 15,000, management costs of AED 5,000, and maintenance and insurance of AED 6,000.
The resulting annual net operating income is AED 74,000. Dividing that by AED 1.6 million produces a net yield of approximately 4.63%, before finance and any investor-specific tax. These are example inputs, not typical charges or a forecast for a named project.
Obtain the building’s approved service-charge information and written management and insurance quotes. Distinguish ordinary maintenance from major one-off work, but allow for both in your cash planning. Avoid counting an expense twice if a management package already includes it.
Mortgage cash flow is another measure
Subtract annual debt payments from net operating income to estimate the cash remaining after finance. Principal repayment builds equity, while interest is a borrowing cost, so neither a simple cash-flow figure nor net yield alone describes the entire investment return.
Cash-on-cash return uses your actual cash equity as its denominator. State the definition you use and keep any expected capital gain separate. Our cash or mortgage guide explains why borrowing can amplify both gains and losses.
Test a weaker year
Recalculate with lower rent, a longer vacancy and a substantial repair. For holiday letting, use occupied nights and a realistic net nightly rate, then deduct platform fees, management, utilities, cleaning obligations and furnishing replacement. A hotel occupancy statistic is not evidence for one residential unit’s performance.
Keep your assumptions dated and attach the supporting quotes. Review the full purchase budget before accepting a yield comparison. A credible income estimate should remain understandable when the headline percentage is removed.
Sources checked 2 October 2026. Images rechecked 5 October 2026. Captions distinguish developer renderings, community photographs and original Imperial Alfa guide graphics.