When a project is marketed with an “8% yield,” that number is almost always the gross yield — annual rent divided by purchase price. It ignores every cost of actually owning and operating the property. The figure that matters for your returns is the net yield.
The two formulas
Gross yield = (annual rent ÷ purchase price) × 100.
Net yield = ((annual rent − annual costs) ÷ (purchase price + buying costs)) × 100.
The gap between the two is driven by recurring costs that vary enormously building to building — which is exactly why an area-average yield tells you very little about a specific unit.
The costs that erode gross yield
- Service charges: Often the single largest deduction, charged per square foot and highly variable. See our guide to Dubai service charges.
- Property management: Typically a percentage of collected rent if you don't self-manage.
- Maintenance & voids: Budget for periodic repairs and the weeks a unit may sit empty between tenants.
- One-off buying costs: Transfer fees, agency, and registration inflate your true cost base — see the full cost of buying in Dubai.
A worked example
Consider a unit bought for AED 1,000,000 renting at AED 75,000 a year. The gross yield looks like 7.5%. Now deduct, say, AED 12,000 in service charges, AED 6,000 in management, and AED 4,000 averaged maintenance/voids — AED 22,000 of costs. Net income is AED 53,000. Against a cost base of roughly AED 1,070,000 including buying costs, the net yield is closer to 4.95% — materially different from the 7.5% headline.
Model it before you buy
The discipline is simple: never compare properties on gross yield alone. Our free rental yield calculator lets you input rent, service charges, and costs to see gross and net side by side in seconds, and our area guides give typical yield ranges by community.
Figures above are illustrative, not a forecast. For a transparent read on a specific opportunity, speak with our advisory team.
Apply this lens to your own mandate with our team.
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