Gross vs Net Yield in Dubai: How to Calculate Real Returns

At the other end, premium addresses start lower: Palm Jumeirah at 4.5%, La Mer at 1.5% and Trade Center 1 at 1.7% (Bayut). On these properties, the net is eaten into even more by charges.

The weight of charges by property type

Service charges vary sharply by property type: luxury towers reach 20-50+ AED/sq ft/year while a villa stays at ~2-6 AED/sq ft/year (RERA). It's this gap that eats further into the net yield of premium districts, where high prices and high charges stack up.

Before calculating your net, check the price and rent per square foot on the fact sheet for the district you're targeting rather than on a press average. Our fact sheets for Arjan, Downtown Dubai or Palm Jumeirah carry the most recent Bayut figure for each address.

Off-plan or completed property: what changes in the return calculation

With off-plan, the property produces no rent during construction: the return is pushed back in time until handover, whereas a completed property generates rent as soon as the tenant moves in. This income-free period has to appear in your return calculation.

The acquisition costs differ too. Bought from the developer off-plan, the property generally carries no agency commission on the buyer's side, against 2% + 5% VAT in the resale market. Fixed fees are lighter: the title deed costs 40 AED off-plan versus around 580 AED on a completed property.

The deposit and payment plan

The off-plan deposit is generally between 5 and 20% of the price at reservation, with the funds secured in a regulated escrow account under Law No. 8 of 2007. The rest is spread over a payment plan, which ties up less capital upfront and changes the return on equity.

I often see buyers forget the rent-free months between signing and handover: on a project like The Archive, from 700,000 AED and delivered in September 2028, the first rent cheque only arrives after the keys are handed over. This delay has to be set out in the calculation from the start.

The full run-through of these steps is covered in our guide on buying off-plan step by step, and the mechanics of rental charges in the guide property management and charges.

Financing changes the yield: leverage and loan costs

Borrowing splits two measures apart: the yield calculated on the total price and the yield on the equity actually invested, known as cash-on-cash. The latter rises when you commit less capital for the same rent.

Lending caps explain this leverage. In practice a non-resident secures 50 to 75% financing depending on the bank, meaning a 25 to 50% down payment, within the framework set by the CBUAE Rulebook. Less capital tied up means a potentially higher return on equity.

Leverage cuts both ways: positive when the rental yield exceeds the cost of the loan, negative as soon as borrowing costs rise above the yield. The calculation therefore has to be done both before and after financing, or you'll fool yourself about the real performance.

The detail of rates, down payments and bank charges is developed in our guide on financing a purchase as a non-resident.

Why gross yield dominates Dubai listings: the framework behind it

Gross yield is closer to the real net in Dubai than elsewhere, which explains its popularity: individuals pay neither income tax on rental income nor capital gains tax, according to the official UAE government portal. No tax therefore widens the gross-net gap on the local tax side.

VAT reinforces the effect: it's 0% on residential sales and rentals (5% on commercial). A home escapes that line item, where a commercial unit would bear it in its net calculation.

For a French tax resident, the 1989 France-UAE treaty neutralises French tax through a tax credit, without removing it from the effective-rate calculation — a mechanism detailed in our guide on taxation of rental income.

Still, portals show gross for convenience: the rent-to-price ratio is easy to standardise from one property to another. But it always masks the service charges and vacancy, which, for their part, do not disappear.

With my clients, the first question is always about the advertised yield. I systematically bring them back to the net: it's the only figure that tells them what they'll really take home, once charges and weeks of vacancy have passed.

— Zakaria SEBAIBI, Real Estate Consultant

Points to watch: the traps that separate advertised yield from real yield

The most common trap is to take the Bayut yield for a net figure: it's a calculated gross yield, excluding charges and vacancy, never a net figure nor a guaranteed amount. Confusing them means overestimating your return from the very first line of the calculation.

• Ignoring vacancy. Between two tenants, the rent-free weeks and re-letting periods lower the income actually collected over the year.
• Underestimating luxury charges. On a premium tower, service charges crush the net far more than in an affordable district.
• Mixing price sources. Comparing a press price and a Bayut price per square foot in the same calculation distorts the result — keep a single source per district.

Neglecting succession also exposes your heirs: by default, Sharia may apply, and a will registered through DIFC Courts secures the transfer for non-Muslims. This estate-planning point is covered in our guide on Dubai property taxation.

One way to lift the net beyond a standard long-term lease is to switch to nightly rentals, though this brings its own charges and vacancy pattern: we set out the licensing, cost structure and expected returns in our guide on short-term rentals and holiday home yields.

To go deeper into yield ranges by district, see our guide on rental yields in Dubai and the Dubai market page.